Petrol prices "highly likely" to reach Iran War peak, RAC warns

The RAC has warned that petrol prices are “highly likely” to reach an Iran War high, following sustained hikes for most of July.

As of today, petrol prices average 157.81p per litre, less than 2p below the Iran War high of 159.53p recorded on 28th May.

Petrol prices fell throughout June, reaching a low of 150.59p per litre on 6th July, although this was still 13.4% higher than before the war.

The price of petrol has risen by 0.3p per litre over the past 24 hours.

Diesel prices now average 175.71p per litre, up 0.46p since yesterday.

Prices peaked on 15th April at 191.54p per litre, falling to 164.52p per litre by 9th July.

Simon Williams, head of policy at the RAC, said: “Pump prices continued their inevitable rise over the weekend, with unleaded up another 0.6p to an average of 157.81p and diesel a penny to 175.71p.

“Since the start of July, petrol has already increased by more than 6.5p a litre and diesel by 9p, adding £3.50 and £5 to the cost of filling up a family car respectively.

“The outlook for drivers is pretty grim. It looks highly likely now that petrol will hit 160p a litre – its highest level since the United States/Iran conflict began – and diesel 180p by the end of this week, off the back of an elevated oil price.

“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.

“The price drivers pay at the forecourt depends heavily on the global oil price, which has been rising following the end of the ceasefire.

“A short-term pause in hostilities between the countries is unlikely to be enough to quell the oil price. What’s needed is a sustained drop over several weeks and, unless that happens, elevated prices at the pump look like they’re here to stay.

“We continue to encourage drivers to use free apps like myRAC to find the cheapest fuel wherever they are.”

In June, a review conducted by the Competition and Markets Authority (CMA) found no evidence that fuel companies took advantage of the war to increase prices.

Paul Holland, managing director for UK/ANZ vehicle payments at Corpay, including UK brand, Allstar, said: “Inflation fell to 2.6% on Wednesday – cheaper fuel prices being a major contributor.

“However, by Thursday, Brent crude was back above $100 a barrel, something we haven’t seen since May this year.

“That gap of a single day is the clearest illustration of the volatility in fuel prices currently – something businesses are having to navigate on a more frequent basis as a result of geopolitical uncertainty.”

“As a result, the relief in those inflation figures earlier this week is already being handed back. Diesel fell by more than 10p a litre between May and June, and it has added around 4p in the past ten days alone.

“UK fleets do not experience that as an economic statistic, they experience it as an overhead that constantly moves, and a 10p swing across a large vehicle base runs into thousands of pounds a week.

“What fleet operators keep telling us is that the volatility is harder to deal with than the price itself. A budget set against one oil price can be out of date within a fortnight.

“Nobody can accurately predict when fuel prices will reach their highest point, and trying to is certainly not an effective fuel strategy.

“For me the practical response has not changed. Watch the fuel data closely, review purchasing behaviour regularly, and check to see that your organisation’s fuel policy is still doing its job now rather than in three months’ time when margins have already been eroded.

“In short, the businesses that come through periods like this the best will be those taking an almost forensic approach to fuel data and a pragmatic one to fuel policy amid volatile market conditions.”