War in Iran Costs UK Drivers Extra £10 Billion at Pumps

By the Editorial Team · Monday, October 26, 2026

British drivers have faced an extra £10 billion in fuel costs since the Iran conflict began, with petrol and diesel users paying over £3 billion and £7 billion more respectively, according to the RAC Foundation. This surge has increased government VAT revenue by nearly £1.7 billion and sparked debate over planned fuel duty rises, which could further raise costs amid ongoing geopolitical tensions.

British motorists have incurred an additional £10 billion in fuel costs since the onset of the conflict involving Iran, according to a recent analysis. The study, conducted by the RAC Foundation, found that the surge in global oil prices has led to a cumulative increase of more than £3 billion for petrol drivers and £7 billion for diesel users in the UK. This translates to an average extra expense of approximately £42 million per day over the eight months since the war began on February 28.

The spike in fuel prices has also generated significant additional revenue for the government through value-added tax (VAT). Chancellor John Healey has reportedly collected nearly £1.7 billion more in VAT, as the standard 20 percent levy yields higher returns when fuel prices rise.

The findings have intensified calls for the government to reconsider planned increases in fuel duty scheduled for early next year. Labour’s proposed Budget includes a 3p-per-litre duty rise set for January 1, followed by an additional 2p hike on March 1. Additionally, the government plans to end a 16-year freeze on fuel duty with a 1p increase in April. These rises, combined with VAT, could amount to a total increase of 7.2p per litre, adding nearly £4 to the cost of filling an average family car.

The higher fuel prices come amid concerns over ongoing geopolitical tensions that have pushed oil prices to their highest levels in more than six months. Increased costs at the pumps are expected to persist for months, coinciding with anticipated rises in household energy bills in January.

Industry voices have emphasized the financial pressure on everyday drivers. AA president Edmund King highlighted that a typical commuter traveling 15 miles each way could face an annual increase of around £330 in fuel expenses compared to pre-conflict levels. He noted that this increase disproportionately affects lower-income individuals who rely on their vehicles for work. King advocated for extending the existing 5p-per-litre fuel duty cut introduced during the 2022 energy crisis, suggesting an additional 5p cut to alleviate some of the burden.

Political reactions have been sharply divided. Conservative transport spokesperson Greg Smith criticized Labour’s fuel duty plans, questioning whether the party stands with motorists or persists in what he described as a "war on the motorist." Smith called the proposed fuel duty increase "just plain wrong in this global climate."

Reports indicate that Chancellor Healey may delay the planned fuel duty hike, though the duration of any postponement remains unclear. Requests for official comment from the Treasury were not immediately responded to.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.