The conflict in Iran is already impacting the price of wholesale diesel, which opened at 10ppl higher this morning compared with Friday’s close. Oil is also up, with the cost of a barrel of Brent rising 8% over the weekend.
The US-Israeli strikes on Iran have led to the effective closure of the Strait of Hormuz, a pinch point in the Persian Gulf where, at its narrowest point, Oman and Iran are separated by just 24 miles of sea, and through which around a fifth of the world’s oil passes.
And while diesel’s wholesale price has settled to just 8ppl up, according to MyAutomate’s Portland Pricing database, the firm notes that last week saw “10,000 price increases across all grades of fuel at UK petrol stations”, with some pundits warning that the next two weeks could see drivers face record rises.
The AA’s president, Edmund King, told The Times over the weekend that “the turmoil and bombing across the Middle East will surely be a catalyst to disrupt oil distribution globally, which will inevitably lead to price hikes”, adding: “Drivers beware, within the next 10 to 12 days we could be seeing record prices at the pumps.”
Simon Williams, from rival insurance and breakdown firm RAC, was more circumspect, saying that while the conflict “has the potential to push up pump prices”, this is “not a certainty”. Williams added that “the oil price would have to rise significantly and stay that way for some time to have a dramatic effect.”
A barrel of Brent is currently trading at $78, according to Porland Pricing, while the RAC’s modelling holds that if it rises and remains at $80, UK drivers can expect to pay 136ppl for petrol (current average: 132.9ppl), rising to 150ppl if a barrel of oil climbs to $100. The firm added, though, that “it’s all too soon to know”.
James Hitchman, director at MyAutomate says: “This morning, markets opened with diesel over 10 pence per litre higher than Friday’s close. Markets have settled slightly, but prices remain over 8ppl over Friday’s close. We will continue to monitor pump prices, but price increases are nearly inevitable, as margins were already being squeezed.”
