In brief
Petrol and diesel prices have risen once again, spurred by doubts surrounding the durability of the US-Iran ceasefire. After an initial drop in oil prices following the ceasefire announcement, uncertainties have caused prices to surge. Experts suggest that while wholesale costs may eventually decrease, consumers could face sustained high pump prices if geopolitical tensions continue to escalate.
The cost of petrol and diesel has continued to rise as motorists wait to see if the US-Iran ceasefire leads to cheaper prices at the pump. Oil prices had plunged initially after an agreement to pause the conflict was announced, but rose on Thursday due to concerns over whether the ceasefire would hold. The price of oil remains much higher than pre-war levels, and drivers have been warned not to expect a significant drop in costs soon. However, one motoring group has said fuel prices could start to fall over the next couple of weeks as long as the ceasefire is maintained.Doubts over the durability of the US-Iran ceasefire emerged after Israel launched a wave of strikes on Lebanon. This led Tehran to warn of a 'regret-inducing response' if they continue, while US President Donald Trump has indicated that the country's forces will remain in the region until Iran complies with the 'real' ceasefire agreement. One of the conditions of the ceasefire was that ships would be able to safely use the Strait of Hormuz - a key shipping route for global oil and gas supplies. However, reports that Iran will keep this crucial shipping route closed because of the Israeli strikes have renewed fears of a lengthy disruption to energy supplies, which would keep fuel prices high.As geopolitical tensions rise, the price of a barrel of Brent crude increased by 3.2% to $97.94. Since the war began on February 28, wholesale oil prices have surged by 35%. Crude oil's price, being a primary ingredient in petrol and diesel, heavily influences gas costs. Recent data from UK motoring group the RAC indicates that the average petrol price was 158.03p a litre and diesel was 191.11p, both slightly higher than the previous day. This has resulted in a full tank of petrol costing an additional £13.86 and a full tank of diesel costing an extra £26.80 since the conflict began. While the RAC suggests that drivers should not expect immediate falls in pump prices, the AA indicates that wholesale fuel costs might be lower than earlier in the week. Given that there is typically a 10 to 14-day lag in price adjustments, consumers could see price stabilization or even reductions within the next week, assuming the ceasefire holds.Global market sentiments have also displayed caution, with stock markets reversing some prior gains, reflecting uncertainty over the stability of the ceasefire and the safety of the Strait of Hormuz. Reports indicate that only a few ships have passed through the strategically vital strait since the ceasefire, far below pre-war transit rates, with existing backlogs potentially extending shipping delays for weeks or months.
