The Iran oil crisis has cost UK drivers £4 billion through higher fuel prices, according to new analysis by the RAC Foundation. The motoring research charity estimated that rises in pump prices since the conflict in the Middle East began on February 28 have led to motorists paying £3 billion more for diesel and just over £1 billion more for petrol.
Analysis of Fuel Price Increases
The figures are based on average daily pump price rises and last year’s fuel consumption rate. The analysis also shows that the additional VAT received by the Treasury because fuel is more expensive has reached almost £670 million. VAT on road fuel is charged at 20% on top of the combined price of the product and fuel duty, with the latter standing at nearly 53p per litre.
Government Response
Prime Minister Sir Keir Starmer announced last month that a planned rise in fuel duty from September 1 has been scrapped until at least the end of the year. Iran’s restrictions on tankers passing through the Strait of Hormuz led to oil prices hitting their highest level since 2022.
Current Fuel Prices
The average price of a litre of petrol and diesel at UK forecourts is about 24p and 36p respectively, more expensive than before the war began. Donald Trump has said an agreement on a US-Iran peace deal “is now complete” and the Strait of Hormuz oil and gas shipping route is to be reopened without tolls. Oil prices dropped after the US president made the announcement, with Brent crude falling more than 4% at one stage on Monday to just above 83 US dollars a barrel, marking its lowest level for more than three months.
