Motorists in the UK have faced higher fuel costs since the US-Israel war with Iran began on 28 February.
The conflict has significantly disrupted the production and transportation of energy across the Middle East.
The RAC motoring group has warned that prices at the pump could keep rising if there is no resolution to the conflict.
How do wholesale oil prices affect the cost of petrol and diesel at the pump?
Crude oil is a key ingredient in petrol and diesel, which means that higher wholesale costs make filling up a car more expensive.
Analysts say every $10 (£7.53) increase in the oil price pushes up pump prices by roughly 7p a litre.
Since the war began, the price of a barrel of Brent crude – the global benchmark for wholesale oil prices – has been very volatile, jumping from $73 to $126 a barrel at one point, the highest since Russia’s full-scale invasion of Ukraine.
That put the cost of filling a typical family car with petrol up by around £14. A tank of diesel became £27 more expensive.
What has happened to petrol prices in the UK?
The price of petrol reached 158.5p a litre on 19 May, the highest since the war began. Diesel was 185.9p a litre.
The previous high was seen in mid-April, after which prices fell for a time before starting to increase again.
The RAC said it expected unleaded petrol to rise to at least 160p a litre in the coming weeks unless there was a “dramatic and sustained drop” in the price of oil. It thought the outlook was a little better for diesel drivers.
Petrol and diesel prices remain well below the levels reached in the summer of 2022 following Russia’s invasion of Ukraine, when petrol reached 191.5p a litre and diesel hit 199p.
Because transporting oil is a slow process, price movements in the wholesale markets take about a fortnight to show at the pump.
Fuel retailers have denied accusations of price gouging during the conflict. The official markets regulator investigated these claims and said that profit margins were “broadly unchanged” between February and March.
A 5p per litre fuel duty cut was first introduced in 2022, but had been “frozen” ever since. The fuel duty rate on red diesel – used by farmers and rail freight – will also be cut by over a third from 15 June until the end of the year. In addition hauliers will be given “a holiday” for their HGV vehicle excise duty for 12 months.
Will oil prices keep going up?
For the wholesale markets, the most critical issue remains the status of the Strait of Hormuz.
About 20% of the world’s oil and liquefied natural gas normally passes through the strait, but it has been effectively closed since the war began.
A ceasefire between the US/Israel and Iran that started on 8 April has largely held, but efforts to strike a long-term peace agreement between the two sides have not been successful. Control of the strait has been a major sticking point.
Analysis by BBC Verify showed that only a handful of ships have passed through the Strait since the conflict began – in normal circumstances around 138 vessels make the crossing every day.
Oil prices fell following the announcement of ceasefire, but have risen sharply in the weeks since as efforts to reopen the strait have failed.
In addition, the conflict has damaged oil and gas facilities across the Gulf, badly disrupting refining capacity.
The investment bank JP Morgan thinks global oil prices are likely to remain above $100 for the rest of the year, even if the current restrictions on the strait are lifted.
Where does the UK get its oil and gas?
The UK is heavily reliant on oil and gas imports, with the majority coming from the US and Norway.
The price of oil on the global market determines how much the UK pays for it.
Although the UK does get some oil from the North Sea, most of that is exported for refining elsewhere.
Could there be an oil shortage in the UK and what does it mean for flights?
On 16 April, Chancellor Rachel Reeves said the UK was not facing an immediate shortage of petrol, diesel, or jet fuel.
Oil makes up 35% of the UK’s total energy supply, according to the Department for Energy Security and Net Zero. As a member of the International Energy Agency (IEA), the UK must hold 90 days’ worth of net oil imports, but currently has more than this.
The IEA has suggested a number of measures to reduce energy and fuel use in response to the conflict, including encouraging staff to work from home or car share.
European jet fuel prices more than doubled after the war started but are currently about 50% higher.
As a result, several airlines operating in the UK and around the world have cancelled flights and raised their prices.
In response the UK government has announced a series of measures:
2 May: Airlines facing fuel shortages in the summer will be able to cancel flights in advance, without losing valuable take-off and landing slots at busy airports
20 May: Strict sanctions on Russian oil refined into diesel and jet fuel in third countries have been eased. Some restrictions on the transport of Russian liquefied natural gas (LNG) were also lifted
Will my energy bills rise?
In the short term, millions of UK householders’ domestic gas and electricity bills are shielded from any impact on wholesale costs paid by suppliers.
People whose energy bills are covered by the price cap saw their unit costs fall in April, and those will not change until the end of June.
However, bills are expected to rise when the next price cap takes effect at the start of July.
Analysts Cornwall Insights have predicted that the cap will go up by £209 to £1,850 a year for a typical dual fuel household, an increase of 13% from the current £1,641 annual bill.
Ofgem is due to confirm the level of the July energy cap on 27 May.
Anyone who already has a fixed energy tariff won’t see a price rise for the length of their contract. But some suppliers have been pulling cheaper fixed deals for new customers off the market.
Heating oil is used by many households in Northern Ireland, and in some rural areas. The cost of that fluctuates more directly in response to the oil price, so the latest global uncertainty has pushed up bills for those households refilling their tanks.
The government announced a £53m support package to help those affected.
Additional reporting by Emer Moreau, Kevin Peachey, and Dearbail Jordan
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