Fuel prices continue to surge in the wake of conflict in the Middle East, official data has confirmed, as economies worldwide are hit by the fallout.
The average price of petrol rose to 144.16p per litre on 23 March, up from 131.71p recorded before the US launched strikes on Iran on 28 February. Meanwhile, diesel has risen to 166.88p from 140.28p according to the new government figures.
This means the cost of filling up a 55-litre family diesel car has increased by as much as £14.63 in just under a month, with further price rises expected.
The rise has been fuelled by a spike in oil prices, which have soared as high as $112 a barrel in recent weeks, and remain over $100 (£75).
A dramatic spike after Iran launched retaliatory attacks on the world’s largest liquefied natural gas facility in Qatar caused prices to soar close to those seen in June 2022, when a barrel of oil peaked at $119 at the early months of the Ukraine war.
The cost of oil has a significant effect on the cost of wholesale fuel.
Conflict spread across the Middle East after the US and Israel carried out strikes on Iran in February, which were followed by retaliatory Iranian attacks on targets in the United Arab Emirates (UAE), Qatar, Bahrain, Jordan and Iraq.
Blasts continue to be reported across the region, as America and Israel continue airstrikes on Iranian targets. As fighting escalates, Iran has warned that it will “set fire” to any ships trying to pass through the Strait of Hormuz.
The strait provides the only passage from the Persian Gulf to the open ocean, making it a crucial point for the oil industry. Around 20 per cent of the world’s gas and oil is shipped through the waterway, with the Iranian threat proving highly damaging for global trade.
Donald Trump set a deadline of 23 March for Iran to reopen Hormuz, threatening to “obliterate” the country’s power plants if they did not comply. However, on Tuesday the US president said this action had been postponed in light of “good and productive” talks between the two nations.
Iranian state media has denied talks took place, and claimed that Trump “retreated” from his deadline “out of fear of Iran's response.”
Commenting on rising fuel costs, AA president Edmund King has urged UK motorists to consider cutting out “non-essential journeys”.
He said: “The longer this conflict goes on, the more effect it will have on the cost of oil.
“Any time Brent Crude passes 100 dollars per barrel raises concern across the markets, for the haulage industry and drivers.”
Analysis of the historic link between oil and fuel prices by think tank the Energy and Climate Intelligence Unit shows oil trading at 100 dollars a barrel typically results in petrol prices of about 150p per litre, while oil hitting 120 dollars a barrel means petrol prices of about 170p per litre.
Rachel Reeves has said she would “not tolerate price gouging” by forecourt operators after some were recorded charging as much as 180p per litre for petrol. The chancellor has said she will soon lay out steps to protect consumers from “unfair price rises”.
Some have also called for the chancellor to cancel Labour's planned increase in fuel duty which will reverse the 5p-a-litre cut introduced in March 2022 in response to Russia’s invasion of Ukraine.
Ms Reeves announced a reversal of the cut in November’s Budget, beginning with a 1p increase in September this year, followed by 2p in December and the final 2p in March 2027.
The chancellor has so far rejected calls to scrap the plan, but has said the policy is “under review”. A Conservative bid to cancel the planned increase was defeated in the Commons last week.
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