UK motorists have spent an additional £2 billion on fuel since the escalation of tensions in Iran drove pump prices up, according to new findings from the RAC Foundation. The data reveals that drivers have shelled out an extra £500 million for petrol and £1.5 billion for diesel in just over a month.
Before the conflict in Iran heightened at the start of February, the average petrol price stood at 132.83p per liter, and diesel was at 142.38p per liter. Currently, petrol is priced at 156.98p per liter, down from a peak of 158.31p, while diesel stands at 188.53p per liter, down from 191.54p.
The analysis demonstrates that the Treasury has collected over £336 million in additional VAT due to the surge in pump prices. This estimation is based on the average daily price increases and last year’s fuel consumption rates.
Steve Gooding, the director of the RAC Foundation, expressed concern over the financial strain on motorists as the conflict in the Persian Gulf continues to impact their wallets. He highlighted that diesel vehicle owners have been hit the hardest by the price hikes, potentially passing on the costs to their customers.
The closure of the Strait of Hormuz has led to a surge in petrol and diesel prices, driven by the spike in crude oil prices. Crude oil is a key component in fuel production.
The recent spike in oil prices saw them surpass $126 (£94) a barrel, the highest level since 2022, amidst fears of renewed US actions against Iran. Although Brent crude later dropped to just over $121 (£89) a barrel, uncertainties remain as peace talks between the US and Iran falter.
In addition to the impact on fuel prices, UK households are expected to face increased energy costs this summer due to the ongoing conflict. Ofgem is set to announce the next price cap level for July in the coming month.