Motorists in the UK are warned petrol prices are likely to hit 160p per litre from Friday, a new record since the start of the Iran war.
Conflict in the Middle East has seen the price of Brent Crude oil surge from below $70 (£52) to briefly peak over $120 (£90), with almost the entirety of the past five months seeing the price above $85 (£63).
While that price dropped after an initial ceasefire, a resumption of missile attacks saw another spike through the second half of July to around $100 (£75), while the past week has seen the price drop more than 6 per cent, back to around $86 (£64) on Friday.
However, changes in oil price can take up to two weeks to be reflected at petrol pumps in the UK. The average price of petrol was 131.71p before the US launched strikes on Iran on 28 February.
Simon Williams, head of policy at the Royal Automobile Club (RAC), said: “The outlook for fuel prices is pretty grim. It looks highly likely that a litre of petrol will surpass 160p on average tomorrow [Friday] which will be a new record since the United States-Iran conflict began.”
Back in May, then still-prime minister Keir Starmer said a 5p increase in fuel duty would be postponed until the end of the year due to the war.
Meanwhile, the price of diesel is expected to hit 180p “very soon” and rise further towards 185p.
“The price of diesel is rising faster than petrol due to the UK’s heavy reliance on diesel imports and as a result of increased demand for US diesel,” Mr Williams explained.
Retailer profit margins are typically around 8p to 15p per litre, according to PetrolPrices, but it is currently lower than usual as forecourts hold back on passing on the milestone price.
James Hitchman, operations director at PetrolPrices, said: “Many retailers appear reluctant to move above the psychologically important 160p-per-litre threshold, with prices increasingly clustering at 159.9p. Much of the recent rise in wholesale unleaded costs has already been reflected at the pumps, but retail margins remain slightly below their six-month average.”
As for what’s next, most experts expect further volatility – but as much depends on the fluctuating nature of the Trump administration’s feelings over attacking or talking, it’s difficult to predict.
“We believe Brent oil prices will continue to whipsaw in the $80 to $100 per barrel range in the near term as the conflict ebbs and flows in the Middle East,” said Suvro Sarkar, head of energy research at DBS Bank.
RAC figures show it will cost £88 to fill a 55-litre family car with petrol at 160p per litre, while it’s £99 for a diesel equivalent when that cost hits 180p per litre.
