UK diesel price hits record high of £2 a litre
France proposes that EU nations and IEA release oil and diesel from reserves as Iran war drives up cost worldwide
British motorists face more pressure at the pumps after the average price of diesel climbed to a record £2 a litre.
The price of a litre at UK forecourts has risen 40.5% since late February, when the US-Israel war on Iran began disrupting supplies of crude and refined oil products from the Gulf, leading to cost increases across the economy.
The RAC motoring group said on Friday that the average price had reached 200.01p a litre, meaning the cost of filling up an average family car is now £110, nearly £32 more than before the Iran war.
Simon Williams, the head of policy at the RAC, said: “This is a pump price threshold that no one wanted to cross.”
The RAC figures measure the average cost of fuel, but in reality many forecourts have been selling diesel above £2 a litre for some time.
Petrol prices are also continuing to rise, with a litre of unleaded costing 174.1p on average, a 31.5% increase since 28 February, taking the cost of a typical tank to £96, just over £23 more than before the US-Iran conflict.
Earlier on Friday the transport minister Keir Mather sought to avert panic at the pumps, insisting the UK was not facing a diesel shortage, after Donald Trump threatened to cut off US supplies of the fuel.
The Trump administration has told Germany and France to release their diesel stockpiles to help ease soaring global energy prices or face a US export ban.
On Thursday, the UK opened talks with European allies over releasing emergency supplies, and Dan Jørgensen, the EU commissioner for energy, said on Friday that Europe was discussing the diesel reserves issue with all members of the International Energy Agency (IEA), not only the US.
In a video conference with G7 leaders, chaired by the French president, Emmanuel Macron, attenders discussed a proposal from the French government that European nations release 50m barrels of diesel from reserve supplies, and for members of the IEA to release 50m barrels of crude oil, Reuters reported.
The UK relies on the US for about 30% of its diesel, with the vast majority coming from mainland Europe, and has reserve supplies for 42 days.
Motorists and small businesses have been struggling with the increasing cost of filling up.
Williams added: “This will be very challenging for households and companies that drive a lot of miles, from commuters, haulage and delivery firms, businesses with large fleets all the way through to sole traders.
“In a cruel twist, it’s diesel vehicles, which were once considered the most cost-effective option for lengthy journeys, that are now burning a hole in people’s pockets.”
Capital Economics estimated that a ban on US exports of diesel could raise UK diesel prices from £2 a litre to £3 a litre and push inflation up to 5%, from 3.1% in August.
The fresh high was recorded after record fuel prices across Europe in recent weeks, which have ignited calls for political leaders to take action to protect consumers against rising cost pressures.
Inflation in the cost of road fuels has outpaced the surge in global oil markets due to a sharp drop in output from refineries damaged by war in the Middle East and in Russia.
Before the Ukraine war, Russia provided between 10% and 15% of the world’s diesel supplies. Another 10% of global diesel supplies transited through the strait of Hormuz from Gulf nations before Iran responded to the US-Israeli attacks by disrupting the strait.
Trump has pushed his Ukrainian counterpart, Volodymyr Zelenskyy, to cease Kyiv’s drone and missile attacks on Russian refineries so they can help to relieve the global fuel squeeze.
The Middle East war has also pushed up household energy bills. This week the quarterly price cap rose by 4%, meaning a typical household in Great Britain will pay £1,723 a year. The cap is forecast to increase by a further 16%, equivalent to adding £276 to the average annual dual-fuel bill, to take it to £1,999, according to the leading forecaster Cornwall Insight.
Reports of talks among European nations to potentially release diesel and oil reserves fuelled a 2.5% fall in the price of Brent crude to $99.78 a barrel.
“This highlights that the main stress in the energy market is no longer crude availability, with Middle East flows recovering,” said Ole Hansen, the head of commodity strategy at Saxo Bank. “But rather refined product supply, constrained by reduced refinery capacity and output across the Middle East and Russia.”