Motorists are bracing for increased fuel prices as a resurgence of conflict in the Middle East escalates the cost of oil. The average price of a liter of petrol has reached 151 pence, a slight increase from 150.7 pence a week prior, while average diesel prices stand at 164.9 pence per liter.
Experts warn of further price hikes after crude oil surpassed $80 a barrel, having dipped close to $70 earlier this month. This surge is attributed to renewed fighting between Iran and the United States, which has restricted the movement of oil tankers through the vital Strait of Hormuz. Prior to the current conflict, which began in February, the Strait of Hormuz was a critical artery for approximately one-fifth of global daily oil and liquefied natural gas supplies.
Luke Bosdet, the AA's spokesman on pump prices, noted that despite a recent decrease in petrol prices, drivers are now facing new increases as the summer holiday season approaches. Filling a typical 55-liter car now costs around £10 more than before the conflict between Iran and the U.S. started in late February, when petrol was priced under 133 pence per liter. Unleaded prices had climbed to nearly 160 pence per liter during the spring due to the ongoing conflict.
The conflict initially drove oil prices from approximately $70 a barrel at the end of February to a high of $126 in April. Following a fragile ceasefire agreement between the U.S. and Iran, oil prices decreased, leading to a drop in petrol costs. However, recent exchanges of missile and drone attacks between the two nations have caused oil prices to climb again.
RAC head of policy Simon Williams cautioned that recent savings at the pump could soon dissipate. He indicated that drivers planning summer trips might encounter slightly higher prices at the forecourt, with future pump prices in the UK dependent on the ongoing U.S.-Iran tensions.
The rise in oil prices is fueling concerns about a potential resurgence of inflation, which could impact households and businesses. This, in turn, might compel the Bank of England to consider raising interest rates, leading to increased mortgage costs. The prospect of higher interest rates also presents a challenge for political leaders, as rising government borrowing costs become a significant issue.