UK Fuel Prices Climb After Collapse of US-Israel-Iran Peace Talks

UK fuel prices are going up again after the collapse of peace talks to end the US-Israel war with Iran.

When the conflict began on 28 February, fuel prices surged as the fighting severely disrupted the production and transportation of energy across the Middle East.

Prices then nosedived when US and Iran agreed to a framework deal to end the fighting in June but have started increasing as tensions resurface.

Motoring firm RAC's head of policy Simon Williams said "the increases are likely to keep coming thick and fast".

Crude oil is a key ingredient in petrol and diesel, which means that higher wholesale costs make filling up a car more expensive.

Analysts say every $10 (£7.53) increase in the oil price pushes up pump prices by roughly 7p a litre.

Since the war began, the price of a barrel of Brent crude – the global benchmark for wholesale oil prices – has been very volatile.

Before the conflict, Brent was about $70 a barrel, but the conflict saw it peak at above $120.

In early July, after the framework deal was signed, prices fell back to the near $70 a barrel mark, but have climbed back up again since to around $87 a barrel.

According to the RAC, the average price of petrol reached an Iran war peak of 159.53p a litre on 28 May, while diesel's highest average price during the conflict was 191.54p a litre on 15 April.

In early July, the RAC said the average price of diesel sank to a low of 150.50p per litre for petrol and 164.52p per litre for diesel.

Since then the prices have been rising and according to its latest data, petrol now costs 152.54p a litre while diesel costs 167p a litre.

The RAC's Williams says they are likely to continue rising because of the jump in the Brent crude price.

Despite the conflict, petrol and diesel prices remain below the levels reached in the summer of 2022 following Russia's invasion of Ukraine, when petrol reached 191.5p a litre and diesel hit 199p.

Because transporting oil is a slow process, price movements in the wholesale markets take about a fortnight to show at the pump.

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, external lets drivers compare the cost of fuel offered by petrol stations across the UK.

Luke Bosdet, the head of policy at the AA, said the group had been surprised at the speed that prices had fallen and put it down to the scheme.

On 20 May, 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.