UK motorists have spent an additional £2 billion on fuel since the escalation of tensions in Iran caused a surge in pump prices. Recent data from the RAC Foundation reveals that drivers have shelled out an extra £500 million for petrol and £1.5 billion for diesel in just over a month.
The average price of petrol stood at 156.98p per liter on Thursday, slightly lower than the peak of 158.31p, while diesel was priced at 188.53p per liter, down from 191.54p. Prior to the conflict in Iran, petrol was priced at 132.83p per liter, and diesel at 142.38p per liter.
Analysis indicates that the Treasury has collected more than £336 million in additional VAT due to the pump price hikes. These calculations are based on the average daily increases in pump prices and last year’s fuel consumption rates.
Steve Gooding, the director of the RAC Foundation, expressed concern over the financial strain faced by motorists due to the ongoing conflict in the Persian Gulf, warning that the economic impacts could persist even after the conflict ends. Diesel vehicle owners are particularly affected by the price hikes, with many commercial users likely to pass on the increased costs to their customers.
The closure of the Strait of Hormuz has led to a sharp rise in crude oil prices, resulting in soaring petrol and diesel costs. Crude oil, the primary raw material for fuel production, hit over $126 (£94) a barrel on Thursday, the highest level since 2022 during the Russian invasion of Ukraine.
As peace talks between the US and Iran falter, concerns about fresh US strikes on Iran have driven oil prices up. Despite a slight decline to just over $121 (£89) a barrel, the situation remains tense. UK households are expected to face higher energy expenses this summer as a result of the conflict, with Ofgem set to announce the next price cap level for July in the coming month.