Experts explain when petrol and diesel costs will fall after oil plummets | Personal Finance | Finance
Fuel costs have become brutal in a short space of time (Image: Images By Tang Ming Tung via Getty Images)
Average petrol prices have climbed to nearly 155p a litre as costs continue to rise amid the Iran conflict – but experts suggest “we’re likely close to the peak if the ceasefire holds”. Though one cautioned “it’s still not impossible for fuel to reach £2 per litre, even with the prospect of peace”.
Petrol prices have reached 154.65p a litre on average across the UK – almost 20p a litre higher than at the outbreak of hostilities. This represents the highest level since October 2023 and marks a rise of more than 17 percent since the conflict began six weeks ago.
Diesel has now hit 186.75p a litre on average in the UK – the highest level since November 2022. Some drivers have even reported spotting prices exceeding £2 a litre at certain forecourts.
In the US, average petrol prices have soared more than 20 percent from $3.45 a gallon to $4.16 in just one month. Mounting costs at the pump could heap pressure on US President Donald Trump ahead of the mid-term elections in November.
However, some welcome news emerged today with a 14-day ceasefire brokered between the US and Iran. Consequently, oil prices have eased and markets are responding favourably. The price of Brent crude oil dropped by approximately 13% to nearly $95 (£71) a barrel this morning.
Price rises could be peaking (Image: PA Archive/PA Images)
Read more: Savers making crucial decision this week ‘up to £83,000 better off’
Read more: UK fuel price drops ‘could be passed on quickly’ at certain stations
Prem Raja, head of trading floor at Currencies 4 You, advised motorists that it was worth shopping around for the best deals and suggested prices may have reached their peak.
He added: “Petrol prices tend to lag oil, so even though crude has started to fall on the ceasefire news, drivers won’t feel it immediately. We’ve already seen oil drop sharply, but pump prices are still reflecting the earlier spike when supply through the Strait of Hormuz was disrupted. In terms of a peak, we’re likely close or already there if the ceasefire holds.
“Prices surged quickly due to panic and supply fears, and historically, that’s when you see the sharpest moves. But coming down is always slower. If the ceasefire sticks and oil continues lower, then yes, petrol prices should gradually follow. The key risk is that flows don’t fully normalise straight away, which could keep prices elevated in the short term.
“For drivers, the main way to save right now is being price aware. There can be a meaningful difference between stations, especially between motorway services and local forecourts, so it’s worth shopping around.”
Tony Redondo, founder of Newquay-based Cosmos Currency Exchange, stated that forecourt prices would ease downwards gradually should the ceasefire hold.
He added: “Expect a ‘rocket and feather’ effect. Pump prices rose quickly but will drift down slowly, likely staying above 145p per litre through the summer, down from around 157p, driven by Middle East conflict. A two-week ceasefire announced overnight has led analysts to suggest we may be in the ‘peak zone’, with wholesale costs expected to stabilise.
“However, infrastructure damage and the risk premium on the Strait of Hormuz mean prices won’t fall sharply. Much will depend on whether the ceasefire leads to meaningful peace talks or hostilities resume.
“To save money, favour supermarket forecourts, which average 4.4p cheaper than branded stations. Bear in mind that the 5p fuel duty cut is due to begin tapering in September 2026, which could offset any global price drops.”
Antonia Medlicott, founder and MD at London-based Investing Insiders, warned that everyday costs remained stubbornly high.
She went on to say: “The jump in petrol prices speaks less about the current conflict and more about markets pricing in risk, particularly when it comes to global supply routes. Unless there is a further escalation that disrupts supply, this could stabilise sooner than was previously anticipated.
“However, drivers would be wise not to assume that a ceasefire will result in immediate relief at the pumps, and the bigger issue for households is how exposed they are to these repeated shocks. While spikes can be temporary in isolation, the cumulative effect on day-to-day costs can be significant and enduring.”
Samuel Mather-Holgate, MD and IFA at Swindon-based Mather and Murray Financial, cautioned that petrol prices were likely to remain elevated.
He added: “The ceasefire in the Middle East has seen oil prices plummet, but this isn’t the end of the story. Volatility remains and petrol prices will stay elevated until there looks to be an enduring peace, and with Israel in the mix that could be a way off.
“Although Trump wants out of the war he started, Netanyahu certainly won’t be happy with a hollow ‘victory’ and will want to finish the job. Jitters will remain and petrol prices will stay high for some time. It’s still not impossible for fuel to reach £2 per litre, even with the prospect of peace.”
