Fuel prices stop rising after 43 days of increases, RAC says

Fuel Prices Stabilize After 43 Days of Increases

Following a 43-day stretch of upward movement, the average cost of petrol and diesel has plateaued, according to the latest data from the motoring group RAC. This pause in price growth comes as the Gulf conflict has eased, reducing crude oil prices from their recent high points. Consequently, wholesale fuel costs have seen a decline, though prices remain elevated compared to pre-war levels.

Gulf Ceasefire Cuts Crude Oil Costs

The temporary halt in hostilities in the Gulf has led to a drop in crude oil prices, which are now lower than they were earlier in the month. This decline has indirectly eased fuel prices on wholesale markets, though the effects are yet to fully translate to pump prices.

Current Fuel Costs Reflect Recent Trends

According to the RAC, petrol now averages just over 158p per litre, up from 133p in late February. Diesel, meanwhile, has climbed to 192p per litre, compared to 142p in the same period. The organization suggests that prices may decrease in the coming weeks, offering some relief to drivers.

War Impact on Global Fuel Markets

The recent US-Israeli conflict with Iran disrupted the Strait of Hormuz, a critical oil transport route responsible for 20% of global oil and liquefied natural gas. This disruption spiked energy costs, but the resumption of calm has since mitigated some of the pressure.

Refinement Challenges and Demand Dynamics

Diesel prices have surged more than petrol due to its higher refining complexity. The UK imports roughly half of its fuel, and global demand remains robust, contributing to sustained price levels despite the recent dip in crude oil costs.

“Wholesale fuel costs are now significantly lower than at the start of the month, so forecourt prices should begin to decline,” stated Simon Williams, RAC’s head of policy.

“As things stand, we’d expect petrol and diesel to drop by several pence per litre in the next week or so,” he added.

Regional Price Variability

Rival motoring group the AA highlighted that price reductions might vary depending on location, describing the situation as a “pump-price postcode lottery.” Edmund King, the AA’s president, noted that areas with competitive retailers could see more immediate drops, while others might lag due to slower adjustments.

Historical Price Context

Current fuel costs are still below those observed in summer 2022, when Russia’s invasion of Ukraine pushed petrol to 191.5p and diesel to 199p per litre. However, the recent rise has increased the cost of filling a family car with petrol by £14 and diesel by £27.

Regulatory Scrutiny Intensifies

Earlier in 2022, the Competition and Markets Authority (CMA) identified instances of “rocket and feather” pricing, where fuel costs spiked rapidly but fell slowly. Since then, the CMA has maintained regular monitoring of prices and plans to enhance this oversight amid ongoing energy cost fluctuations.

Government Tool for Price Comparison

A new initiative allows UK drivers to evaluate fuel prices across different stations, providing a clearer picture of regional variations and potential savings.