The average price of a litre of diesel in the UK is poised to surpass its all-time high of 199.09p, set on June 25, 2022, with some analysts predicting it will not only cross the £2 mark but climb higher. Currently, the average price hovers around 197.75p, with various sources reporting slightly different figures, such as 198.32p or 198.5p. Approximately 15% of UK forecourts are already selling diesel at or above £2 per litre, with 201.9p being a frequent price at these locations. The RAC's head of policy, Simon Williams, suggests the question is no longer if, but how far above £2 a litre prices will go.
This surge in diesel prices is primarily attributed to a global supply crisis, exacerbated by geopolitical conflicts, including the US-Israel war with Iran and Russia's ongoing conflict in Ukraine. These conflicts have impacted refinery operations and erased a significant portion—estimated around a fifth—of global diesel supplies. The situation is further compounded by supply constraints and renewed tensions in the Middle East, particularly following the suspension of Saudi Arabia’s East-West pipeline, according to James Hitchman of PetrolPrices.
Retailers are quickly passing on higher wholesale costs to motorists due to already squeezed profit margins, which have remained below their six-month average for diesel. Simon Williams of the RAC notes that the cost of filling a diesel car has increased by £30 since the Iran/US conflict began, with an average tank now costing £108.52. Only a sudden and sustained drop in oil prices, which appears unlikely, could prevent diesel from averaging over £2 a litre. Every $10 per barrel increase in oil price typically pushes pump prices up by about 7p per litre.
