Price of diesel tops 190p a litre amid hopes the cost at the pumps has peaked
However experts say the ceasefire agreement between the US and Iran could see a positive impact on soaring fuel costs
The price of diesel has surpassed 190p a litre up by more than a third since the Iran war began.
However experts expressed hope the price could "top out" in the coming days following the ceasefire agreement between the US and Iran on Tuesday evening (April 7).
The average price of diesel was 190.6p on Wednesday morning, up 34% since February 28, the RAC said.
Meanwhile unleaded petrol was priced at 151.7p, up 19% since the escalation of the conflict.
RAC head of policy Simon Williams said: “Both fuels are now at their most expensive since late 2022.
"The conditional ceasefire announcement may have taken some heat out of global oil prices, but the outlook for drivers in the UK remains highly uncertain.
“The best hope in the short-term is that pump prices stop rising at the rate they have been and hopefully top out in the coming days.”
Read more: This is why the Iran War is hitting your bills and what might happen next Read more: 'Far too little, far too late': Starmer 'didn't prepare properly' for the Iran war, says Cleverly
The global price of oil fell by 15% to less than $100 a barrel after the United States and Iran agreed a two-week ceasefire on Tuesday evening.
Mr Williams continued: “Much will depend on the stability of the ceasefire, whether oil shipments can move freely through the Strait of Hormuz, and the longer‑term impact on oil production across the Gulf
.“As it is a sustained lower oil price – over several weeks, not just a few days – that is required to bring wholesale fuel costs down meaningfully.
“Drivers should not expect significantly cheaper fuel in the short term, although some smaller independent forecourts buying on a ‘spot’ basis may be quicker to pass on any reductions.”
The conditional ceasefire includes reopening the important Strait of Hormuz waterway.
Investors welcomed the deal following a turbulent six months since the conflict began on February 28.
London’s FTSE 100 index of major firms jumped by as much as 2.6% at the start of trading as a result.
The price of Brent crude, the global oil benchmark, fell by 14.3% to $93.6 (£69.78) a barrel as a result.
Asian stocks spiked with key with key regional indexes such as Japan’s Nikkei 225 and South Korea’s Kospi rising by more than 5%.
European markets also opened positively, with the FTSE 100 up by 2.59%, to 10,617.07 points after the opening bell, taking it to its highest level for around a month.
However the price remains considerably higher than before the conflict started when it traded around $72 a barrel.
Susannah Streeter, chief investment strategist at Wealth Club, said there were hopes the ceasefire could alleviate increases in the cost of living.
She said: “A wave of relief has hit financial markets after threats of a devastating escalation of the war were replaced by a temporary truce.
“The FTSE 100 has jumped on the open, on the back of sharp gains for indices in Asia.
“The two-week ceasefire is likely to be fraught with uncertainty but for now there are hopes that it will be a precursor to a longer-lasting agreement.
“There is a chance that the cost-of-living crisis consumers are already having to deal with may not be quite as painful.”
Listen to this article
Trump agreed to a provisional two-week ceasefire in the Iran war after pulling back at the last-minute from his apocalyptic warning that “a whole civilisation will die” unless Tehran met his demands.
Less than two hours before his deadline passed for Iran to agree a deal, the US president said he was suspending his threat to widen the military offensive to power plants and bridges subject to the reopening of the critical Strait of Hormuz waterway.
He said Tehran proposed a 10-point plan that provided “a workable basis on which to negotiate”.
The US President praised the action on Truth Social this morning, saying he feels this "could be the Golden Age of the Middle East", and told AFP in an interview the ceasefire was "total and complete victory" for the US.
Read more: Iranians form 'human shields' at power plants after Trump threatened civilian infrastructure
Read more: US and Iran agree two-week ceasefire as regime agrees to reopen Strait of Hormuz
He wrote: "A big day for World Peace! Iran wants it to happen, they’ve had enough! Likewise, so has everyone else!
"The United States of America will be helping with the traffic buildup in the Strait of Hormuz. There will be lots of positive action! Big money will be made. Iran can start the reconstruction process.
"We’ll be loading up with supplies of all kinds, and just 'hangin’ around' in order to make sure that everything goes well. I feel confident that it will.
"Just like we are experiencing in the U.S., this could be the Golden Age of the Middle East!!! President DONALD J. TRUMP."
Prime Minister Sir Keir Starmer has welcomed a ceasefire agreement in the Middle East as he travels to the region to meet leaders of Gulf countries.
“I welcome the ceasefire agreement reached overnight, which will bring a moment of relief to the region and the world,” he said.
“Together with our partners we must do all we can to support and sustain this ceasefire, turn it into a lasting agreement and reopen the Strait of Hormuz.”
The move followed a request by Pakistan, which has been acting as a mediator in the conflict between the warring sides.
The Iranian regime said it had accepted a temporary truce but warned that its “hands remain upon the trigger”, while a White House official said Israel had also accepted the terms of the ceasefire agreement.
Israeli Prime Minister Benjamin Netanyahu said Israel backed Mr Trump’s suspension of strikes against Iran, but said any deal does not cover fighting against Hezbollah in Lebanon.
Pakistan Prime Minister Shehbaz Sharif said he had invited Iranian and US officials to Islamabad for talks on Friday.
The US president had given Tehran until 1am on Wednesday UK time to end its chokehold on the strait or face annihilation.
Writing on his Truth Social platform, Mr Trump said: “Based on conversations with Prime Minister Shehbaz Sharif and Field Marshal Asim Munir, of Pakistan, and wherein they requested that I hold off the destructive force being sent tonight to Iran, and subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz, I agree to suspend the bombing and attack of Iran for a period of two weeks.
“This will be a double sided CEASEFIRE! The reason for doing so is that we have already met and exceeded all Military objectives, and are very far along with a definitive Agreement concerning Longterm PEACE with Iran, and PEACE in the Middle East.”
He added: “We received a 10 point proposal from Iran, and believe it is a workable basis on which to negotiate.
“Almost all of the various points of past contention have been agreed to between the United States and Iran, but a two week period will allow the Agreement to be finalized and consummated.
“On behalf of the United States of America, as President, and also representing the Countries of the Middle East, it is an Honor to have this Longterm problem close to resolution. Thank you for your attention to this matter! President DONALD J. TRUMP”
Iran’s Supreme National Security Council said it would negotiate with the US in Pakistan’s capital, Islamabad, starting on Friday.
But while accepting a ceasefire, it said in a statement: “It is emphasised that this does not signify the termination of the war.
“Our hands remain upon the trigger, and should the slightest error be committed by the enemy, it shall be met with full force.”
Iran’s foreign minister Abbas Araghchi also said ships would be allowed to pass through the strait over the next two weeks in “coordination” with the country’s military.
He said in a statement: “For a period of two weeks, safe passage through the Strait of Hormuz will be possible via coordination with Iran’s armed forces and with due consideration of technical limitations.”
Prior to the conflict, there were no restrictions and it was not clear if Iran would continue to seek to charge ships as it had been doing during the war.
On its 10-point plan for the future, Iran also said the strait would be subject to “regulated passage… under the coordination of the armed forces of Iran”.
In doing so, it would be “conferring upon Iran a unique economic and geopolitical standing”.
This would appear to be at direct odds with Mr Trump’s demand for the shipping route to be fully open to vessels and flags potential future difficulties to overcome.
In the face of ongoing military strikes by the US and Israel, Iran has tightened its grip on the critical shipping route, sending global oil and gas prices skyrocketing and causing global economic uncertainty.
Earlier, ahead of the announced ceasefire, Mr Trump said: “A whole civilisation will die tonight, never to be brought back again.
“I don’t want that to happen, but it probably will.”
Among those to criticise his ominous threat was Pope Leo XIV, who branded it “truly unacceptable”.
Separately, the US State Department said secretary of state Marco Rubio and Ms Cooper had spoken “about the Iranian regime’s ongoing attacks across the Middle East and the critical importance of restoring freedom of navigation in the Strait of Hormuz”.
A spokesman added: “The secretary and Foreign Secretary agreed on the need for international efforts to ensure shipping can move freely and energy supplies can reach global markets.”
On Tuesday, the UK chaired a meeting of military planners from a coalition of more than 30 nations examining long-term measures to make the shipping route safe and accessible once hostilities have ended.