Petrol prices are poised to fall below 150p per litre across the UK next week, marking the lowest level since March, as hopes for an end to the Iran war drive oil prices down. Brent crude has dropped below $73 (£55) a barrel, around its level before the conflict erupted in late February, as traffic through the Strait of Hormuz gradually resumes.
Impact on Drivers and Economy
Simon Williams, head of policy at the RAC, said: “On the back of the lowest oil price since before the Iran war started, drivers should see the average price of petrol fall below 150p in the next week or so. If this happens, unleaded will be at its lowest price since March 26.” Diesel, which has already fallen below 170p for the first time since March 22, is expected to drop back under 160p. Williams urged retailers to pass on wholesale savings to drivers immediately. Before the war, an oil price of $70 translated to average petrol of 132p and diesel of 141p.
The national average petrol price has fallen by 7.2p per litre since peaking at 159.53p on May 28, while diesel has tumbled by 22.17p from its high of 191.54p on April 15. The decline will reduce the Treasury’s tax windfall from earlier price spikes, but this may be offset by increased consumer spending as motorists save on fuel. Falling fuel prices are also expected to feed through to lower inflation.
Outlook and Expert Views
AA president Edmund King noted: “While drivers have been pleasantly surprised by the speed of price falls at the pump, there is some way to go before prices return to where they were before the outbreak of the war.” He cautioned that some drivers fear “prices could go the other way” due to “uncertainty” over future US and Iran actions, but added: “The hope is that pump prices continue to tumble with the summer getaway late in July now coming into view.”
US Energy Secretary Chris Wright told a forum that flows through the Strait of Hormuz were near pre-war levels, with at least 20 million barrels exiting the waterway in the last 24 hours. However, normalisation would take a few weeks because the strait needs to be demined. UBS analyst Giovanni Staunovo confirmed: “Most of the increase in flows from the Gulf is outbound ships exiting the Strait.”
