With the situation between Israel and Iran remaining volatile after the feuding nations both violated a ceasefire agreement on Tuesday, drivers up and down the country will be asking themselves if now is the best time to fill up with fuel while prices are relatively low.
Ongoing tensions in the Middle East have triggered instability for global oil prices in recent weeks. This has been reflected by a short burst of increased UK forecourt pricing over the last few days.
The average price of a litre of petrol has jumped by 1.5p to 133.6p in a week, while diesel has risen by 2p to 140.1p.
This followed threats from Iran that it could close the Strait of Hormuz, the pivotal trade route that sees around a fifth of the world’s oil consumption pass through the tiny sea passage.
With the Strait described as the ‘world’s most important oil transit chokepoint’, a closure would almost certainly trigger oil prices to rocket – and send the cost of petrol and diesel at fuel stations much higher.
So, what does this mean for motorists in Britain? Should you be jumping in the car this second to fill up?
Window of opportunity? With the situation between Israel and Iran remaining volatile, drivers will be asking if now is the best time to fill up with fuel while prices are relatively low
Experts have already drawn up what they believe to be a ‘worst-case scenario’ if Iran was to close the trade route.
Analysts from Goldman Sachs suggested that prices for Brent crude oil could hit $110 if the Strait of Hormuz is blocked.
Despite this, it predicts that prices for Brent could average around $95 per barrel towards the end of the year.
It warned: ‘While the events in the Middle East remain fluid, we think that the economic incentives, including for the US and China, to try to prevent a sustained and very large disruption of the Strait of Hormuz would be strong.’
HSBC has also suggested that oil prices could rise if the conflict continues, potentially exceeding $80 a barrel.
However, Goldman Sachs’ worst-case scenario prediction is still a ‘long way off’ the price rise triggered by Russia’s invasion of Ukraine three years ago, the RAC’s Simon Williams explains.
He said the outbreak of conflict between the neighbouring nations in spring 2022 pushed the average barrel price to $137.72, which caused average prices to reach record highs in the summer of 191.5p for petrol and 199p for diesel.
In the last 24 hours, at least two supertankers each carrying up to two million barrels of oil, have performed U-turns near the Strait of Hormuz over concerns about ongoing strikes in the Middle East.
However, oil prices extended losses on Tuesday to hit a two-week low on what the market viewed as lower risk of supply disruptions.
Brent crude futures were down $3.52 – or 4.92 per cent – at $67.96 a barrel by lunch time, while West Texas Intermediate (WTI) crude fell $3.42 – down 4.99 per cent – to $65.09.
Both contracts lost as much as 5 per cent in early trade after Trump announced a ceasefire agreement between Israel and Iran, which both parties initially breached.
This drop in oil has already had an impact on wholesale fuel prices, according to the AA.
Luke Bosdet, the motoring group’s fuel price spokesperson, told us: ‘Average pump prices have been heading up but, for now, the threat of something nasty has been lifted with oil falling back below $70 a barrel.
‘Wholesale petrol values have fallen as much as 3p a litre so far today.
‘There is obviously some of the impact of increased commodity fuel values still to work their way through the system to the pumps but yesterday’s average petrol pump prices were only 1.5p a litre above the four-year lows of a 10 days ago.’
The RAC’s Simon Williams added: ‘As retailer margins have been high for some time, the oil price rise has squeezed these to fairer levels for drivers.
‘If, however, retailers are set on maintaining margins of around 12p a litre, we may well see the average price of fuel go up further.’
On Tuesday, 305 Tesco forecourts, 220 Asda filling stations and 180 Sainsbury’s sites had petrol priced below 130p a litre
Do I need to rush out to fill up my car today?
‘We haven’t seen the need to advise drivers to fill up sooner rather than later,’ the AA’s fuel expert Bosdet told us.
‘Pump prices are still relatively low and the price transparency provided by the Competitions and Markets Authority now shows which filling stations sell the cheapest fuel.’
In September 2023, the CMA launched its ‘voluntary’ Fuel Finder live data, with retailers urged to provide up to date information on how much their forecourts are charging.
It shows that hundreds of fuel stations across the UK were selling unleaded at less than 130p a litre yesterday.
On Tuesday, 305 Tesco forecourts, 220 Asda filling stations and 180 Sainsbury’s sites had petrol priced below 130p a litre.
One Tesco fuel station in Greenwood, West London, was selling unleaded for just 123.9p, the CMA data shows.
‘Petrol today is up another tenth of a penny to average 133.6p a litre. The four-year low was 132.0p a litre,’ Bosdet told us.
‘It will rise a bit more but there is little need to break normal routines unless, perhaps, you’re a high-mileage traveller.
‘Even then, you’ll likely cut costs along the route because there is much greater opportunity of finding cheaper fuel.’
