Diesel prices across the UK are expected to reach unprecedented levels over the coming days as geopolitical tensions continue to affect global fuel markets. The average cost of diesel at the pump currently stands at 198.32p per litre, approaching the previous all-time high of 199.09p set on 25 June 2022 following Russia’s invasion of Ukraine. Industry observers anticipate this record will be surpassed as retailers adjust their pricing to reflect rising wholesale costs.
The escalation in fuel prices stems largely from disruptions caused by the US-Israel conflict with Iran over the past seven months. The fighting has severely impacted oil production and transportation in the region, driving up wholesale costs for fuels globally. The closure of the Strait of Hormuz, a critical waterway through which approximately 20% of the world’s oil and liquefied natural gas typically flows, has significantly constrained global supplies. While a framework agreement between the US and Iran in June initially brought relief and lower prices, fuel costs have risen again as tensions resurface and geopolitical uncertainty persists.
Crude oil prices remain highly volatile, with Brent crude—the global benchmark for wholesale oil—fluctuating significantly since the conflict began. Before the war, Brent crude traded near $70 per barrel but peaked above $120, before falling back to around $70 following the framework deal. Current prices have climbed back above $100 per barrel. Analysts estimate that every $10 per barrel increase in oil prices results in roughly 7p added to pump prices per litre.
Additional pressures on UK fuel prices may emerge if the US implements proposed restrictions on diesel exports. President Trump has indicated consideration of a ban on US diesel sales overseas, which could further elevate prices in countries heavily dependent on American fuel supplies, including the UK. The UK imports the majority of its oil and gas from the US and Norway, making it particularly vulnerable to supply-side disruptions.
A planned 5p increase in fuel duty scheduled for September has been postponed until the end of December in response to the conflict. The RAC motoring organization has called for maintaining fuel duty at current levels through the end of Parliament. Industry regulators have found no evidence of retailers employing opportunistic pricing strategies during the crisis, though pump prices continue to climb as wholesale costs are passed through to consumers.
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