Motorists face the prospect of higher fuel prices as renewed conflict in the Middle East drives up the cost of oil, according to the AA. The average price of a liter of petrol has reached 151 pence, a slight increase from a six-week low of 150.7 pence recorded a week prior. Average diesel prices stand at 164.9 pence per liter, showing a marginal uptick of 0.1 pence over the same period. Experts warn of further price increases after crude oil surpassed $80 a barrel, a significant rise from its dip near $70 earlier this month. This surge is attributed to renewed fighting between Iran and the U.S., which has restricted tanker movements through the vital Strait of Hormuz. The Strait of Hormuz accounts for approximately one-fifth of global daily oil and liquefied natural gas supplies.
Luke Bosdet, the AA's spokesperson on pump prices, noted that despite a recent decrease in petrol prices, drivers are now anticipating new increases as the summer holidays approach. Filling a typical 55-liter car costs approximately £10 more than before the conflict between Iran and the U.S. began at the end of February, when petrol prices were below 133 pence per liter. Unleaded prices climbed close to 160 pence per liter during the spring. The conflict initially drove oil prices from around $70 a barrel in late February to a high of $126 in April. A subsequent fragile ceasefire between the U.S. and Iran led to a drop in petrol prices, but recent missile and drone exchanges have caused oil prices to surge again. RAC head of policy Simon Williams cautioned that recent savings at the pump could quickly disappear. He suggested that drivers planning summer getaways might encounter slightly higher prices. The trajectory of UK pump prices, he stated, depends on whether further exchanges occur between the U.S. and Iran. The rising cost of oil has also ignited concerns about a potential resurgence of inflation for households and businesses. This could compel the Bank of England to consider raising interest rates, which would subsequently increase mortgage costs. The prospect of higher rates also presents a challenge for political figures, as government borrowing costs are on the rise, with the ten-year gilt yield nearing 5 percent after falling below 4.7 percent last month.