Pump prices rising as sterling weakens against dollar

After a month of falling fuel prices in June, July saw both petrol and diesel rise again as sterling lost 3% against the dollar, data from RAC Fuel Watch reveals.

However, pump prices are still cheaper than they were at the start of June as 1.55p was added to the average price of a litre of unleaded petrol during, July it to 129.21ppl (in June petrol fell 3p a litre to 127.62p). Diesel went up less, by 0.93ppl to 131.95ppl (in June diesel reduced by 4.6ppl to 130.90ppl).

At the four big supermarkets the fuel price rise was steeper with 1.88ppl being added to petrol, taking their average price to 125.95ppl. Diesel went up 1.64ppl, making a litre cost 128.62p.

Wholesale prices rose as a result of oil experiencing a mid-month boost, hitting a high of $67.41 on 10 July but falling away to $63.97 by the close. The other oil price-defining factor – the strength of sterling – took a dip following the change of Prime Minister, with the pound dropping 3% from $1.26 at the start of July to $1.22 by the close.

RAC fuel spokesman Simon Williams said: “While there were only relatively small rises in both petrol and diesel, the situation might have been far worse if the drop in the value of the pound had combined with the higher mid-month oil prices. And, of course this could still prove to be the case if the pound doesn’t recover in the next few weeks.

“The price of a barrel of oil has been fluctuating between $60 and $70 since the end of May as traders can’t seem to be able to get a clear understanding of what’s happening with global demand. On the one hand there is talk of an economic slowdown in China and, on the other, concerns about supply due to the tanker hijacking issues in the Strait of Hormuz through which a third of the world’s sea-borne oil supply is shipped.

“Drivers can only hope we don’t see the combination of a rising oil price and a falling pound. This could easily lead to petrol going above the 2019 high of 130.67ppl seen at the start of June and diesel exceeding the year’s high point of 135.54ppl at the end of May.”