Diesel prices surge to 16-month high and oil costs see biggest weekly gain since 2020 amid Iran war
Diesel prices have surged to a 16-month high since the start of the conflict in the Middle East, new figures suggest.
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The RAC said the average price of a litre of the fuel at UK forecourts has gone up by nearly 6p since Saturday to 148p.
It has not been this expensive since mid-August 2024.
Average petrol prices have risen by almost 4p per litre since Saturday to 137p.
The increases mean filling a typical 55-litre family car with petrol has become £2 more expensive, with a rise of about £3.30 for diesel cars.
Disruption to tanker traffic in the Middle East has sparked a rise in oil prices, which have a significant effect on wholesale fuel prices.
Read more: Stock markets tumble as oil prices surge in biggest weekly gain since 2020
The price of Brent crude oil has risen by about 21% over the past week, exceeding 88 US dollars (£66) a barrel on Friday.
RAC head of policy Simon Williams said: “While wholesale costs for any retailer buying in new stock will have gone up, it normally takes two weeks for price changes to work their way through to the forecourt.
“Brent crude jumped to 85 US dollars (£64) on Thursday, something we haven’t seen since July 2024.
“If the price of a barrel stays at this level, or increases, then further forecourt rises will be inevitable.
“While the rate of increase has been fast, we’re fortunately a long way from the record prices of 2022 when the average price of petrol hit 191.5p and diesel 199p.”
Analysis of the historic link between oil and fuel prices by think tank the Energy and Climate Intelligence Unit (ECIU) found that oil trading at 100 dollars (£75) a barrel could see petrol prices hit 150p per litre.
Earlier this week, the AA said there was “no need for drivers to break their refuelling routine”.
The sharp gains since the US-Israel war with Iran began on Saturday mean oil prices have risen by more than 25% so far this week – the biggest weekly gains since early 2020 at the height of the Covid-19 pandemic.
Comments from US President Donald Trump that there would be no end to the conflict until an “unconditional surrender” of the Iranian regime has further dashed hopes of a de-escalation.
Kathleen Brooks, research director at XTB, said: “There is not much to stop (oil) from hitting 100 dollars per barrel in the near term.“Until the oil price stabilises it’s hard to see how stock markets and bond prices can recover.”She cautioned over further stock market falls next week.
“If the war continues to escalate over the weekend, we think that markets will continue to sell off, especially after the rapid increase in oil prices today,” she said.
UK Government borrowing costs have also risen sharply this week due to inflation fears.
The yields on 10-year government bonds, also known as gilts, have jumped from 4.27% at the start of the week to 4.62% on Friday, with fears that soaring fuel and energy bills will put paid to further interest rate cuts.“
The rapid repricing of monetary policy expectations and the UK’s history of high energy prices means that UK gilts are particularly vulnerable to this energy price spike,” Ms Brooks said.