The UK automotive organization RAC reports that the average retail price of diesel in the UK has exceeded £2 per liter for the first time, reaching 200.01 pence on Friday. The average price of petrol has risen to 174.71 pence, with increases still ongoing.

On Monday, it surpassed the previous high of 199.09 pence set in June 2022, shortly after Russia's invasion of Ukraine. On Thursday, the average price of diesel was 199.79 pence. RAC policy director Simon Williams stated that £2 is a threshold no one wanted to cross, affecting commuters, freight, delivery, large fleets, and individual operators.

Filling up a typical family car with diesel now costs about £110, nearly £32 more than at the start of the US-Iran conflict. For a 55-liter tank, diesel costs £110.01, which is £31.70 higher than on February 28; petrol of the same capacity costs £96.09, £23.03 more. A diesel vehicle achieving 45 miles per gallon translates to about 20 pence per mile, with annual fuel costs around £2020 for 10,000 miles driven.

RAC attributes the price increases over the past seven months to disruptions in Middle Eastern crude oil and refined product production and transportation due to the Iran conflict, with no agreement for the reopening of the Strait of Hormuz. Attacks on Russian refineries by Ukraine have further tightened global diesel supply, and China has also restricted refined oil exports.

The EU discussed France's proposal to release diesel stockpiles on Friday in response to US demands to lower fuel prices. French President Emmanuel Macron plans to discuss the oil and refined product markets with G7 counterparts after speaking with US President Donald Trump. According to Reuters, at an exchange rate of $1 to £0.7573, £2 per liter is approximately $2.64.

This price increase is driven by supply disruptions rather than a sudden increase in domestic demand. Buyers include diesel vehicle owners at gas stations, freight, and fleets, while sellers are refineries, importers, and stockholders still able to ship. Money is flowing from transportation companies and household fuel budgets to crude oil and diesel spot markets. Beneficiaries are refiners with exports and stock; those under pressure are UK diesel vehicle owners, delivery companies, and businesses passing fuel costs onto customers.

Source: Public Information