Petrol prices in the United Kingdom have reached their highest levels since early 2022, driven largely by ongoing tensions linked to the conflict in Iran. According to the Royal Automobile Club (RAC), the average cost of a litre of petrol at UK forecourts reached 160.0p on August 1, marking the highest price since the current Iran conflict began in late February, when fuel averaged 132.8p per litre.
The geopolitical unrest in the Middle East has caused significant fluctuations in global oil markets. Brent Crude oil prices surged from below $70 per barrel before the conflict to a peak exceeding $120 in the months following the February 28 outbreak of hostilities. Although prices initially dropped following a ceasefire, renewed missile attacks throughout the latter half of July pushed prices back up to approximately $100 per barrel. More recently, crude prices have eased by over 6 percent, settling near $86 per barrel.
Simon Williams, head of policy at the RAC, characterized the fuel price outlook as "pretty grim," anticipating that the average price of petrol will soon surpass the current record daily high since the onset of the United States-Iran conflict. Diesel prices are also expected to rise rapidly, with projections of reaching 180p per litre shortly and potentially climbing toward 185p.
Williams noted that diesel costs are increasing faster than petrol due to the UK’s dependence on diesel imports and heightened demand for US diesel fuel amid the conflict. Retailers have so far been cautious about fully passing on the wholesale price increases to consumers. Profit margins on fuel typically range from 8p to 15p per litre, but current margins are slightly compressed as forecourts hesitate to exceed the 160p-per-litre psychological threshold.
James Hitchman, operations director at PetrolPrices, observed that many retailers have priced petrol just below the 160p mark, with prices clustering around 159.9p. He indicated that recent wholesale price rises have largely been reflected at the pumps, though retail margins remain marginally below their six-month average.
Looking ahead, energy analysts forecast continued volatility in oil prices tied to the conflict’s developments and uncertainty surrounding the Trump administration’s approach to the situation. Suvro Sarkar, head of energy research at DBS Bank, suggested Brent crude would likely oscillate between $80 and $100 per barrel in the near term as fighting continues intermittently.
The financial impact on motorists is significant. At 160p per litre, filling a 55-litre family car with petrol will cost approximately £88, while a diesel equivalent is expected to reach £99 when diesel hits 180p per litre, according to RAC estimates.