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The average price of petrol in the UK has reached 160p a litre, its highest level since the Iran war began on 28 February, according to figures from the RAC.
The motoring group puts petrol at 159.97p a litre and diesel at 178.97p. Diesel remains below its 15 April peak of 191.54p a litre, set as pump prices climbed to their highest level in more than two years.
Pump prices fell after the US and Iran agreed a framework deal in June to end the conflict. In early July, the RAC said, average petrol sank to a low of 150.59p a litre and diesel to 164.52p. Both have risen since the collapse of the peace talks.
Simon Williams, head of policy at the RAC, said the price of diesel was likely to reach 185p a litre “in the next few weeks, barring any major oil price reduction”.
The price of fuel tends to track the wholesale price of oil, and analysts say every $10 (£7.44) per barrel increase in the oil price pushes up pump prices by roughly 7p a litre. Because transporting oil is a slow process, wholesale price movements take about a fortnight to show at the pump.
Brent crude, the global benchmark, was about $70 a barrel before the conflict and peaked above $120 as the fighting disrupted oil supplies across the Middle East. It fell back to near $70 in early July after the framework deal was signed, climbed above $100 when the talks collapsed, and now trades at around $90.
Generally speaking, news of further conflict has driven the price up, while hopes of an end to the war have pushed it down.
Despite the rises, petrol and diesel remain below the levels reached in the summer of 2022 following Russia’s invasion of Ukraine, when petrol hit 191.5p a litre and diesel 199p.
The conflict has effectively closed the Strait of Hormuz, through which about 20 per cent of the world’s oil and liquefied natural gas normally passes. Experts warn that even if a deal is agreed to reopen the strait, it will take time before normal levels of shipping resume, and the impact of the war could continue to affect the global economy for months.
The UK is heavily reliant on oil and gas imports, with the majority coming from the US and Norway, and pays the price set on the global market. Although the UK produces some oil in the North Sea, most of it is exported for refining elsewhere.
Fuel retailers have denied accusations of price gouging during the conflict. The official markets regulator said it had “not seen evidence of retailers actively changing their pricing strategies to take advantage of the crisis”.
A government scheme called Fuel Finder lets drivers compare the cost of fuel at petrol stations across the UK. Luke Bosdet, head of policy at the AA, said the group had been surprised at the speed at which prices had fallen and put it down to the scheme.
On 20 May, the then prime minister Sir Keir Starmer said a planned 5p increase in fuel duty due in September would be postponed until 31 December because of the conflict.
