Diesel prices in the UK could fall by up to 6p a litre after Britain and other G7 countries agreed to release emergency fuel stockpiles, according to economists.
Last week, G7 nations agreed to release 100 million barrels of diesel and oil from emergency reserves following pressure from US President Donald Trump. He had threatened to ban US diesel exports unless other countries took action.
The possibility of a block on fuel shipments from the US had contributed to a recent spike in diesel prices, adding to pressure on drivers since the US-Iran war began at the end of February.
Record pump prices
The RAC says the nationwide average for diesel has reached an all-time high of 200.20p a litre. Many forecourts are charging significantly more, while diesel at motorway services now averages 216.20p a litre. Unleaded has risen less sharply but still stands at an average of 174.94p across the UK.
Analysts at Pantheon Macroeconomics said the G7 release could ease rising inflation in the UK. Reports suggest European countries would contribute around half of the 100 million barrel release, equivalent to 11 days of use in the EU.
“If fully reflected in UK costs and passed through (it) would lower UK diesel pump prices by 5p to 6p a litre, or 2.5%,” Pantheon said.
Impact on households and businesses
Simon Williams, the RAC’s head of policy, said filling an average family car with diesel now costs £110, almost £32 more than at the start of the US-Iran war.
“This will be very challenging for households and companies that drive a lot of miles, from commuters, haulage and delivery firms, businesses with large fleets all the way through to sole traders. In a cruel twist, it’s diesel vehicles, which were once considered the most cost-effective option for lengthy journeys, that are now burning a hole in people’s pockets,” he said.
President Trump is keen to see pump prices fall in the US as voters head to the polls in next month’s mid-term elections. On Monday, he announced a temporary easing of limits on the use of tax-exempt red diesel, which is generally used by farmers and in the construction industry.
