Hard-pressed British motorists could see welcome relief at the fuel pumps within a fortnight, provided the fragile ceasefire in Iran holds firm, according to the latest analysis from the AA.
Potential Price Drop Linked to Ceasefire Stability
Motoring groups indicate that the cost of both petrol and diesel should begin to fall in approximately two weeks if peace talks proceed as scheduled over the coming weekend. This projection hinges on the fuel industry's established rule of thumb, which suggests a 10 to 14-day lag between wholesale cost movements and corresponding changes at retail forecourts.
An AA spokesman elaborated, stating: "Based on this timeline, drivers should expect prices on forecourts to stabilise by next weekend and then subsequently decline – but this is entirely contingent on the ceasefire holding."
Current Fuel Price Burden on Motorists
The RAC has highlighted the significant financial strain on drivers since the onset of the conflict. A full tank of petrol now costs £13.86 more than it did at the beginning of the war, when it stood at £86.92. Meanwhile, a complete tank of diesel has surged by £26.80, now reaching £105.11.
As of Thursday, the average price per litre stood at 158p for petrol and 191p for diesel. This marks a sharp increase from 133p and 142p respectively at the end of February, just prior to the US and Israel launching strikes on Iran.
A reduction in petrol prices would be particularly beneficial for those on the lowest incomes, who have seen the cost of essential items like food and fuel consume increasingly large portions of their household budgets.
Oil Market Volatility and Global Impact
Oil prices have risen by 35 per cent since February 28, when the conflict commenced. Consequently, most nations have experienced rising petrol prices, as tracked by the Global Petrol Prices index. The UK currently ranks 72nd on this list, with Cambodia, Vietnam, and Nigeria being the three worst-affected countries in terms of petrol costs.
Initial optimism following the ceasefire announcement saw oil prices fall and stock markets surge, buoyed by hopes that the conflict might soon conclude and oil tankers could resume unimpeded passage through the strategically vital Strait of Hormuz. However, this optimism proved short-lived, with prices rising again on Thursday as investor scepticism grew regarding the ceasefire's durability.
Geopolitical Tensions and Market Sentiment
Brent Crude, the primary global benchmark for oil prices, increased by 4.6 per cent to $99.11 a barrel on Thursday, following fresh Israeli attacks on Lebanon. Despite this rise, prices remained below the psychologically significant $100 threshold.
Market sentiment was further dampened by comments from US Vice-President JD Vance, who described the arrangement as a "fragile truce." Former President Donald Trump added to the uncertainty by warning that "bigger, better, and stronger" attacks on Iran would follow any breach of the ceasefire.
Long-Term Recovery Challenges for Oil Markets
While petrol prices may decrease if peace is maintained, experts caution that the oil market will require a considerably longer period to fully recover, even if the Strait of Hormuz is successfully reopened.
Helima Croft, Head of Global Commodity Strategy at RBC Capital Markets, explained: "Above all, we think the mechanics of reopening the strait will be exceedingly messy, with Iran potentially having a vote on nearly every barrel that exits the waterway until Gulf countries can build more alternative access routes."
This complex logistical and geopolitical landscape suggests that while short-term relief at the pumps is possible, the underlying volatility in global oil markets is likely to persist for the foreseeable future.
