Newsflash: The average price of a litre of diesel in the UK has hit £2 for the first time.
New data from the RAC shows that diesel hit an average price of 200.01p a litre this morning.
That means diesel prices have surged by 40.5% since the start of the Iran war at the end of February, when diesel cost 142.38p a litre.
A 55-litre tank of diesel now costs £110.01 – £31.70 more than 28 February, the RAC says.
RAC head of policy Simon Williams says:
“This is a pump price threshold that no-one wanted to cross – the average price of a litre of diesel has risen to a record 200.01p and is showing no signs of slowing, heaping more misery onto motorists. The cost of filling up an average family car is now £110, almost £32 more than it was at the start of the US/Iran war.
This will be very challenging for households and companies that drive a lot of miles, from commuters, haulage and delivery firms, businesses with large fleets all the way through to sole traders. In a cruel twist, it’s diesel vehicles, which were once considered the most cost-effective option for lengthy journeys, that are now burning a hole in people’s pockets.
“For an average 45mpg diesel car, the cost works out at an extraordinary 20p per mile, so a driver covering 10,000 miles a year is now spending £2,020 on fuel a year. Households will be tightening the purse strings, while businesses may have no option but to pass these additional costs onto customers.
The previous highest price of 199.09p seen in June 2022 is already becoming a distant memory as the conflict in the Middle East continues with no sign of a deal to reopen the critical oil and gas shipping route through the Strait of Hormuz. Additionally, US threats of a diesel export ban could cause prices to rise even further. Once again, it’s ordinary people who are left footing the bill for events far away, as the UK remains heavily reliant on fossil fuels and imported diesel.
French president Emmanuel Macron will chair a video call with his counterparts from the G7 from 2.30pm local time (1.30pm BST) to discuss possible measures on the world markets for crude and refined products, the Elysee Palace has said in a statement.
This follow US pressure on European nations to release additional diesel stockpiles in an attempt to reduce surging fuel prices.
UK mortgage rates have hit the highest levels in more than two years this morning, pushed up by the turmoil in the bond markets.
The average two-year fixed residential mortgage rate has now risen to 5.96%, up from 5.93% yesterday, Moneyfacts reports. That’s the highest since 30 June 2024.
The average 5-year fixed residential mortgage rate has risen to 5.98%, up from 5.95% yesterday, and the highest since 29 September 2023.
High fuel prices are likely to push eurozone inflation to 4% by the end of the year, predict analysts BillDiviney and AdrianQuinn at ABNAmro.
They told clients:
We expect inflation to continue to move higher over the coming months, although the biggest of the rises is probably behind us with today’s release. Our base case assumes energy prices stay elevated well into 2027, and the broadening pass-through from energy to other categories is expected to push inflation to a peak of a little over 4% by the turn of the year.
The still-rising inflation trajectory alongside the continued diplomatic failure to fully resolve the energy supply crunch is likely to keep the ECB’s Governing Council hiking rates over the coming months. We expect two additional rate hikes by the ECB, ultimately taking the deposit rate to 3%.
The UK government moved to avert panic at the pumps early this morning by insisting that Britain is not facing a diesel shortage, after Donald Trump threatened to cut off US supplies of the fuel.
The transport minister Keir Mather said on Friday that the UK has a wide range of sources of the fuel and is in talks with other European countries over the potential release of emergency diesel stockpiles.
“I want to reassure people that they can still go to the pump and fill up with diesel because the supply we have to the UK is inherently resilient,” he said, speaking on ITV’s Good Morning Britain.
“The flows of diesel into the UK come from a variety of sources, and that is resilient.”
The wholesale price of diesel in Europe has fallen sharply today, the Financial Times, reports, as European countries come under pressure from the Trump administration to release their motor fuel stocks.
The FT has spotted that the continent’s benchmark diesel futures contract fell by nearly 6% to as low as $1364 a tonne, the equivalent of around $185 a barrel.
Yesterday, UK government ministers held calls with counterparts from the European Commission (EC), Germany, France, Italy and Ireland on Thursday to discuss whether to draw down reserves, amid threats that the US could introduce a ban on diesel exports otherwise.
Today’s fresh diesel high was recorded after record fuel prices across Europe in recent weeks, which have ignited calls for political leaders to take action to protect consumers against rising cost pressures.
Inflation in the cost of road fuels has outpaced the surge in global oil markets due to a sharp drop in output from refineries damaged by war in the Middle East and in Russia.
Before the Ukraine war, Russia provided between 10% and 15% of the world’s diesel supplies. Another 10% of global diesel supplies transited through the strait of Hormuz from Gulf nations before Iran responded to the US-Israeli attacks by disrupting the strait.
Newsflash: The average price of a litre of diesel in the UK has hit £2 for the first time.
New data from the RAC shows that diesel hit an average price of 200.01p a litre this morning.
That means diesel prices have surged by 40.5% since the start of the Iran war at the end of February, when diesel cost 142.38p a litre.
A 55-litre tank of diesel now costs £110.01 – £31.70 more than 28 February, the RAC says.
RAC head of policy Simon Williams says:
“This is a pump price threshold that no-one wanted to cross – the average price of a litre of diesel has risen to a record 200.01p and is showing no signs of slowing, heaping more misery onto motorists. The cost of filling up an average family car is now £110, almost £32 more than it was at the start of the US/Iran war.
This will be very challenging for households and companies that drive a lot of miles, from commuters, haulage and delivery firms, businesses with large fleets all the way through to sole traders. In a cruel twist, it’s diesel vehicles, which were once considered the most cost-effective option for lengthy journeys, that are now burning a hole in people’s pockets.
“For an average 45mpg diesel car, the cost works out at an extraordinary 20p per mile, so a driver covering 10,000 miles a year is now spending £2,020 on fuel a year. Households will be tightening the purse strings, while businesses may have no option but to pass these additional costs onto customers.
The previous highest price of 199.09p seen in June 2022 is already becoming a distant memory as the conflict in the Middle East continues with no sign of a deal to reopen the critical oil and gas shipping route through the Strait of Hormuz. Additionally, US threats of a diesel export ban could cause prices to rise even further. Once again, it’s ordinary people who are left footing the bill for events far away, as the UK remains heavily reliant on fossil fuels and imported diesel.
Oil is continuing to drop, which would help to ease inflation pressures if this trend continues.
Crude is weakening following reports that exports of crude from the strait of Hormuz have largely returned to levels seen before the outbreak of the Iran war.
Today’s jump in eurozone inflation from 3.2% to 3.8% marks the fastest jump since March, the first month of the Middle East war, reports ING economist Bert Colijn.
Colijn told clients:
Ouch. Eurozone inflation blew past expectations in September, soaring to its highest level since 2023. Energy inflation remained the main driver of the higher rate.
Despite oil prices remaining somewhat below peaks seen in 2022 and this spring, Euro 95 petrol prices have now reached an all-time high. This is weighing significantly on the inflation basket for the moment.
Lale Akoner, global market strategist at investment platform eToro, argues that the European Central Bank doesn’t need to react immediately to this morning’s jump in inflation:
“Euro-area inflation at 3.8% makes ECB tightening more likely, but the composition of the increase matters. Much of the acceleration is being driven by energy, while core inflation matched expectations at 2.5%. That gives the ECB some room to wait rather than react immediately, particularly as higher bond yields are already tightening financial conditions and weakening demand.
The key risk is that the energy shock spreads into wages, services prices and corporate pricing. Services inflation rising to 3.2%, alongside higher consumer inflation expectations, means policymakers cannot assume the shock will fade. The ECB is therefore likely to retain a hawkish bias, even if an October hike remains uncertain.
For markets, this is an uncomfortable mix: higher inflation, weaker growth and less scope for rate cuts. It supports the euro, keeps pressure on government bonds and favours companies with pricing power and resilient balance sheets over rate-sensitive sectors and weaker consumers.”
