It is predicting some respite for UK drivers
Drivers could finally see petrol and diesel prices start to fall, according to the RAC. Rapid price rises have been the order of the day since the US and Israel attacked Iran at the end of February.
That sent oil prices shooting up, primarily in relation to a key shipping channel, the Strait of Hormuz, being rendered virtually impassable. A ceasefire between the US and Iran led to falls in oil, but prices remain elevated well above what they were before the conflict.
While the ceasefire remains fragile, it is that drop that should bring some relief to drivers, the RAC said. Price rises have slowed in recent days and have now come to a halt – and drops shouldn’t be long off.
RAC head of policy Simon Williams said: “Pump prices appear to have finally stopped rising after 43 days of increases which saw petrol go up 25.5p to 158.3p and diesel 49p to 191.54p. Wholesale fuel costs are now significantly lower than they were at the start of the month, so forecourt prices should begin to come down. As things stand, we’d expect petrol and diesel to drop by several pence a litre in the next week or so.
“It will be very interesting to see if this plays out as the data indicates. We hope it does as drivers could do with some relief at the pumps with a tank of petrol for a family car now costing £87 and the diesel equivalent £105 – £14 and £27 more than they did at the start of the conflict.”
However, not all are so hopeful. Some experts blamed US President Donald Trump for the rising prices at the forecourts and urged the Government to step in to help drivers struggling to pay for fuel. They said the ceasefire was having no effect as the price of oil, still hovering around $100 a barrel – up from about $70 before the war, is expected to stay high with the Strait of Hormuz still not operating as normal.
Riz Malik, Independent Financial Adviser at Southend-on-Sea-based R3 Wealth, said it could get even worse in the coming weeks and months.
He added: “The ‘Trump tax’ you now pay on fuel could go even higher in weeks to come, especially as we are now playing real-life Battleships in the Gulf. Drivers should brace for things potentially getting a lot worse.”
Samuel Mather-Holgate, MD & IFA at Swindon-based Mather and Murray Financial, said drivers were already seeing £2 a litre at some stations.
He added: “Three months ago we were gazing into the future thinking prices would never reach £2 per litre, now we are seeing it regularly on motorway service stations. It’s now a question of when average prices will reach this level as Donald Trump’s war in the Middle East rages on with no end in sight and no plan coming from the White House.
“The level of lunacy from the States, filtering its way into higher inflation in the UK and Europe, will leave a bad taste in the mouth of US’s allies that will need much repair by the next administration.
“More immediately, Trump will want to consider inviting some adults into the room, or at least allowing his European partners to take over negotiations to conclude this bloody conflict that is inflicting not just human pain on the people of the Middle East but economic pain on the West too.”
Anita Wright, Chartered Financial Planner at Ribble Wealth Management, said the ceasefire was not having any effect on prices.
She added: “A ceasefire in Iran was never going to bring prices down overnight. What matters to the fuel market isn’t just the fighting stopping, it’s whether oil can actually flow freely and reliably again. Right now, traders still aren’t convinced.”
