Diesel prices at UK petrol stations have reached a record average of 199.18p per litre, driven higher by ongoing tensions in the Middle East. This level surpasses the previous peak of 199.09p recorded in June 2022 following Russia’s invasion of Ukraine and signals the possibility of prices exceeding £2 per litre soon. The rise coincides with Iran’s conflict and the rejection by former US President Donald Trump of a proposed seven-day peace deal aimed at reopening the strategically vital Strait of Hormuz oil and gas shipping route.
Since the outbreak of hostilities involving Iran in late February, the cost of filling an average family car with diesel has increased by nearly 40%, now approaching £110 according to the RAC. Petrol prices are also escalating, with the average price reaching 174.13p per litre—an increase of 31% since the start of the Iran conflict—making a full tank cost almost £96.
Simon Williams, head of policy at the RAC, described the diesel price surge as entering “new uncharted territory,” warning of wider economic impacts beyond motorists. He noted that sectors reliant on diesel-powered transport, including logistics, manufacturing, and retail, are likely to see increased costs passed on to consumers.
The uncertainty surrounding fuel supplies has deepened following Trump’s statements that he is “very seriously” contemplating a US diesel export ban to curb surging domestic prices. Furthermore, Trump has urged Ukrainian President Volodymyr Zelenskyy to halt strikes on Russian oil refineries, concerned that further damage to these facilities could exacerbate fuel price hikes. The International Energy Agency reported that output from Russian refineries, already crippled by sustained drone attacks and other warfare-related disruptions, has declined by nearly one-third over the past year to the lowest levels seen in two decades.
Experts warn that the ripple effects of soaring fuel costs could affect numerous sectors in the UK economy. Dr. Jonathan Owens, a supply chain specialist at the University of Salford, highlighted how geopolitical conflicts and policy decisions abroad can rapidly translate into higher costs domestically, impacting industries from agriculture to e-commerce.
Against this backdrop, the RAC has called on the UK government to consider expanding existing measures to ease fuel prices for consumers. The government currently maintains a 5p per litre fuel duty cut through the end of the year, but Williams cautioned that rolling back the relief in the spring could add an additional 5p to pump prices. He also pointed to significantly elevated VAT revenues from fuel as a potential area for policy action.
International oil markets have reflected these geopolitical developments, with Brent crude prices fluctuating sharply. Before the onset of the US-Israeli strike on Iran in February, Brent crude traded around $72 per barrel, climbing to a peak of $126 in April amid conflict escalation before falling back to near $71 in July on tentative peace hopes. Prices rose again recently, with Brent crude exceeding $106 per barrel.
Meanwhile, a report published in August by the UK Competition and Markets Authority found that fuel retailers have been slow to pass reductions in wholesale energy prices to consumers and continue to maintain high profit margins. However, the watchdog did not find evidence that retailers have been profiteering directly from the recent geopolitical tensions affecting the Middle East.