Diesel in UK at 16-month high; oil prices rise further due to Iran war

Average diesel prices in Britain have hit a 16-month high, less than a week after the Middle East was hit by war and oil prices soared.

Global energy prices have been the main financial market focus ever since Tehran launched attacks against the Gulf states in response to US-Israeli attacks on their countries, disrupting both the production and distribution of oil and natural gas.

Iran and the United Arab Emirates, situated between the narrow Strait of Hormuz in the Persian Gulf, are accustomed to more than 80 tankers passing through each day.

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But with shipping greatly reduced amid Iranian attacks and threats, all disruptions to normal trade flows are being reflected sharply in petrol and diesel prices through higher wholesale prices in Europe and the US.

Sky News was told on Tuesday how diesel prices in Britain rose by 7p a litre and petrol prices rose by 2p a litre in the wake of a big rise in oil prices on Monday, as financial markets gave their first reaction to the US-led military strikes.

The Petrol Retailers Association (PRA) believed at the time that higher wholesale costs would reach the pumps during the next few weeks but warned that some forecourts would have to pass them on more quickly due to the nature of their fuel-purchase contracts.

RAC policy chief Simon Williams said of British fuel price averages on Thursday evening: “Petrol is now up 3p since Saturday at 136p a litre, while diesel is up 5p to a 16-month high of 147p.

“Although wholesale costs will have increased for any retailers buying in new stock, it typically takes two weeks for changes in prices to reach the forecourt,” he said.

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The PRA told Sky News in response that drivers should shop around to find the lowest prices in their areas using the Fuel Finder app and website. It denied any suggestion that its members were profiteering.

The body stressed that it is not in the interest of fuel operators to force customers to go elsewhere.

People have long accused the industry of raising prices too quickly and passing on the cost burden too slowly.

It has also faced scrutiny from the regulator since the end of the Covid pandemic, particularly regarding its pricing strategies and the perceived lack of transparency in how costs are communicated to consumers.

The latest fuel market update from the Competition and Markets Authority late last year concluded that motorists were increasingly receiving unfair prices, with retailers’ margins remaining “persistently high.”

It is clear that the average fuel price will rise further for at least the coming week, as hostilities in the Middle East continue apace.

Brent crude hit an all-time high on Thursday evening as the war hit global oil prices.

The international benchmark was up more than 5% during the day at $85.50. Oil prices rose after Iran launched a new wave of attacks against Israel, US targets and Middle East countries, including the United Arab Emirates and Qatar.

The threat had an impact on financial markets as a whole, sending stocks falling on investor fears that extended increases in energy costs would drive inflation, causing the central bank to raise interest rates in the process.

In London, the FTSE 100 ended the day down about 1.5%, while its counterparts in France and Germany saw similar declines.

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AJ Bell’s head of financial analysis, Danny Hewson, said the decline in London was widespread, with some sectors worse off than others, such as housebuilders.

“Admittedly, high mortgage rates have discouraged many potential buyers over the past few years, but 2026 promised a lot.

“The news that the three lenders are once again changing course and raising their mortgage rates will be a bitter pill to swallow, especially if concerns about a return to high inflation are well-founded,” he wrote.