The average price of a litre of diesel in the UK has reached a record high, surpassing the previous peak set in the wake of Russia’s invasion of Ukraine in 2022.
According to figures compiled by the RAC, the average price of a litre of diesel stood at 199.18p on Monday. This is 56.8p more expensive than at the start of the US-Iran war on February 28 this year, when a litre averaged 142.38p. The previous record high was 199.09p, reached in June 2022.
Supply disruptions fuel price rise
The cost of diesel has risen steadily in recent weeks due to the impact on global supplies from the ongoing conflict between Russia and Ukraine, and from renewed hostilities in the Middle East.
Russian exports of diesel have dropped sharply after many of the country’s oil refineries were targeted by Ukraine, with a key facility near Moscow damaged earlier this month as part of a huge drone operation. This has led to extra demand for fuel from other diesel-exporting countries, causing wholesale prices to rise.
Meanwhile, the ongoing war between the US and Iran is continuing to disrupt the global trade in refined oil and other petroleum materials, with Iran’s effective blockade of the Strait of Hormuz limiting the production and supply of fuel needed by consumers.
Impact on drivers and economy
The RAC data is based on the average price of diesel at a range of supermarkets, motorway service stations and independent retailers. The cost of unleaded petrol has also been climbing in recent weeks and currently stands at an average of 174.13p per litre, up by 41.3p since the start of the US-Iran war.
RAC head of policy Simon Williams said: “The average price of a litre of diesel has now reached the highest level in UK history, in what will be a financial blow to households and businesses that use their vehicles regularly.
“The cost of filling up an average family car is now almost £110, £31 more than it was at the start of the US-Iran conflict.
“This spells pain not only at the pumps for drivers, but for everyone who buys goods or services that rely on diesel lorries and vans; undoubtedly these increased costs will be passed on to consumers.
“Only a sustained lower oil price – over several weeks, not days – will lead to cheaper prices at the pumps.”
Edmund King, president of the AA, said: “Record diesel prices could be disastrous for the economy and for diesel drivers.
“Diesel helps run the business backbone of Britain. Most delivery trucks use diesel and most goods transported on the roads to our ports or shops are fuelled by diesel.
“When we hit high diesel prices, most hauliers pass on their extra costs to their customers and hence the hikes hit the price of goods on our shelves, which in turn fuels inflation.”
Calls for government action
A total of 15.1 million diesel-fuelled vehicles were licensed to be on UK roads at the end of June this year, down from 15.7 million 12 months earlier, according to the latest figures from the Department for Transport. There were 9.8 million diesel cars, down year on year from 10.4 million. Some 20.4 million petrol vehicles were licensed to be on roads this June, including 18.8 million cars.
Motoring organisations have urged the Government to extend the current 5p cut in fuel duty beyond the end of this year, when it is currently scheduled to be reversed.
“The UK might have limited leverage when it comes to ending the US-Iran war and ultimately bringing oil prices down, but the Government could take steps to ease the burden on drivers by lowering fuel duty further or reducing VAT,” Mr Williams said.
A decision on what happens to fuel duty is likely to be announced by Chancellor of the Exchequer John Healey in his Budget speech on October 28.
“The Government could afford to scrap the planned 5p increase in fuel duty and cut off a further 5p, as a 6p increase in pump prices gives 1p extra VAT to the Treasury,” Mr King said.
“In the last year, prices have increased by about 40p a litre, so the Government’s VAT windfall is approximately 6.5p – so could ‘pay’ for a cut.”
Speaking on BBC Radio 4’s The World At One programme, Treasury minister Emma Reynolds conceded the record price of diesel “is very worrying” but said the Government has “levers” it can use to ease the burden.
“What we’d also like to do is de-escalate the situation in the Middle East, and that’s the sort-of focus of our foreign policy,” Ms Reynolds said.
“But at the same time, we recognise that people face challenges at home.
“Diesel is very worrying, not only for families but obviously also for businesses.
“We have extended the fuel duty freeze until the end of the year but any decisions beyond that will obviously be taken at the Budget.”
