UK petrol prices have risen to their highest level since the Iran war began, as the conflict continues to hit drivers' finances. The average cost of petrol is now more than 163p per litre, according to the RAC, which warned prices could climb higher.
Fuel prices tend to follow the wholesale price of oil, which surged when the Iran conflict started on 28 February. The fighting has severely disrupted oil supplies across the Middle East. Prices then fell sharply when the US and Iran agreed a framework deal to end the conflict in June, but they have risen again since the collapse of peace talks.
Crude oil is a key ingredient in petrol and diesel, so higher wholesale costs make filling up more expensive. The price at the pump is also heavily influenced by demand and refining capacity. Analysts say every $10 (£7.44) per barrel increase in the oil price pushes up pump prices by roughly 7p a litre.
Since the war began, the price of Brent crude, the global benchmark for wholesale oil, has been very volatile. Generally, news of further conflict drives the price up, while hopes of an end to the war push it down. Before the conflict, Brent was about $70 a barrel, but the fighting saw it peak above $120. In early July, after the framework deal was signed, prices fell back to near $70. When the peace talks collapsed, the price climbed back above $100, and it is now around $94.
While petrol has hit its highest price since the Iran war began, diesel remains below the peak of 191.54p a litre it reached on 15 April. In early July, the RAC said the average price of petrol sank to a low of 150.59p per litre, with diesel at 164.52p. Since then prices have risen, with petrol now at 163.6p a litre and diesel at 184.99p.
RAC head of policy Simon Williams said that, with oil prices remaining elevated, drivers will "almost certainly start paying noticeably more at the pumps in the coming weeks".
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 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.
