The BBC reports that a sharp rise in oil prices following escalating conflict in the Middle East has raised concerns about higher fuel costs for UK motorists.
Oil prices jumped by around 10% after attacks by the US and Israel on Iran. Gas prices also surged. The increase is linked to Iran warning vessels not to pass through the Strait of Hormuz — a crucial waterway through which roughly 20% of the world’s oil and gas is transported.
The BBC explains that if restrictions in the Strait continue and oil prices remain elevated, there could be wider knock-on effects across the economy. However, there is still significant uncertainty about whether the conflict will have a lasting impact on oil, gas and broader energy costs.
How quickly could rising oil prices hit UK forecourts?
Crude oil is a key ingredient in petrol and diesel, meaning sustained higher oil prices could feed through to pump prices.
The AA motoring group told the BBC that fuel prices could return to levels seen at the start of the year within the next few weeks, reversing the recent downward trend on UK forecourts.
Current average UK prices, according to AA data cited by the BBC, are:
- Petrol: 132.6p per litre
- Diesel: 142.3p per litre
Simon Williams from the RAC told the BBC that if oil were to climb and remain at:
- $80 per barrel – Drivers could expect to pay around 136p per litre for petrol.
- $90 per barrel – Prices could exceed 140p per litre.
- $100 per barrel – Petrol could approach 150p per litre.
He cautioned that it is still too soon to know how sustained any increase will be.
Could food prices rise too?
The BBC notes that higher petrol and diesel prices increase transport costs for businesses moving food and goods around the country. These increased costs may then be passed on to consumers.
There could also be a more direct impact. Benjamin Goodwin of PRISM Strategic Intelligence told the BBC that some elements of crude oil are used in fertiliser, potentially creating cost pressures in food production.
However, if disruption is short-lived, he suggested it is unlikely to result in an immediate rise in food prices.
Will energy bills increase?
In the short term, millions of UK households are shielded by the energy price cap. Unit prices for those on standard variable tariffs have already been set for the three months from April.
The BBC reports that any sustained rise in wholesale costs could potentially influence the next price cap period from July onwards.
What about inflation and interest rates?
UK inflation has eased significantly since the surge that followed Russia’s invasion of Ukraine. This allowed the Bank of England to cut interest rates six times since August 2024 to 3.75%, according to the BBC.
However, economist Subitha Subramaniam of Sarasin & Partners told the BBC that if crude prices remain high, the impact could “cascade” into other prices such as food and industrial commodities, feeding into inflation.
With the Bank’s rate-setting committee meeting soon, she suggested the prudent course in the short term may be to hold interest rates steady, as it is too early to assess the full impact of higher oil prices.
DM News Commentary
For UK drivers, fuel remains one of the most sensitive household and business costs. Even a rise of a few pence per litre can quickly add up for those who rely on their vehicles daily.
The key message from the BBC report is uncertainty. Prices have reacted quickly to geopolitical tension, but whether that translates into sustained higher pump prices depends on how long the disruption lasts and whether oil remains elevated.
For now, drivers may want to keep a close eye on forecourt prices over the coming weeks, especially if crude continues to climb towards the levels highlighted.
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