Oil prices have declined this week amid optimism that the US-Iran peace agreement could lead to the reopening of the Strait of Hormuz. The deal is expected to be signed on Friday in the Swiss resort of Burgenstock, though full terms remain undisclosed.
Peace Deal Details
US President Donald Trump stated that Iran has agreed to 'never have a nuclear weapon' and that the Strait of Hormuz will be reopened immediately and be 'toll-free'. The price of Brent crude briefly fell below $80 a barrel on Tuesday due to hopes that this vital shipping route will resume operations. During the Iran conflict, oil prices peaked above $120.
RAC Forecast for Drivers
The RAC indicates that the ongoing decline in oil prices will benefit drivers who have faced steep increases in petrol and diesel costs in recent months. Currently, the average price of unleaded petrol is 155.45p per litre, down from its Iran war high of 159.53p on May 28. Diesel averages 175.86p per litre, having dropped from a peak of 191.54p on April 15.
RAC head of policy Simon Williams stated that drivers could see further reductions at the pumps within the next two weeks. He explained: 'If oil now begins to consistently trade around $85 – something we haven't seen since early March – we should see the price of petrol reduce to 148p a litre from its current average of 156p in the next couple of weeks.'
'Diesel, which currently costs an average of 177p, ought to fall to under 160p. Before the war began we had an oil price of $70 which translated to an average petrol price of 132p and 141p for diesel.'
Tips for Motorists
Motorists are encouraged to use driving apps to compare fuel prices and get the best value. UK forecourts are now required to report price updates to a Fuel Finder database within 30 minutes of a change. This data is shared with apps such as Confused.com, DriveScore, Fuel Finder UK, Fuel Spy, MotorMouth, PetrolPrices.com, RAC Fuel Watch, and the AA, enabling drivers to compare prices easily.
Chancellor Rachel Reeves has also reminded petrol retailers of their 'shared obligation' to keep prices low for drivers.
