UK diesel crosses £2 a litre as import dependence deepens the squeeze

Britain’s record diesel prices could reach household budgets even when nobody in the family drives a diesel car. The fuel powers much of the country’s haulage and farming, making food more expensive to transport. Average pump prices have now crossed £2 a litre for the first time, reaching 200.01p, according to RAC figures reported by BBC Business (direct).

The rise follows seven months of disruption to Middle Eastern oil production and shipping during the US-Israel war with Iran. Before the conflict, diesel averaged 142.38p a litre, the RAC said. Petrol has also risen, from 132.83p to 174.71p. That is its highest level in more than four years, although still below the 191.5p peak reached in summer 2022. For diesel users, however, the latest figure sets a new record.

The bottleneck goes beyond crude oil

Brent crude, the global benchmark for oil prices, traded just above $70 a barrel before the conflict and climbed beyond $120 during the fighting. It retreated towards $70 in early July after the US and Iran agreed a framework for ending the war in June. When peace talks collapsed, prices rose again, and Brent is now around $100. Analysts cited in the report estimate that each $10 increase in oil prices adds roughly 7p to the price of a litre at the pump.

But crude oil is only part of the problem. Iran’s effective closure of the Strait of Hormuz disrupted a route that normally carries a fifth of the world’s oil and gas. Oil shipments through the waterway show signs of returning to pre-war levels, yet traders remain concerned that the recovery may not hold. Transport of processed fuels, including road and aviation fuel, remains reduced because regional refineries have been damaged and these more flammable products are riskier to move during conflict.

Britain has an additional vulnerability: its four refineries produce more petrol than the country needs, but not enough diesel. Refinery closures at Grangemouth and Immingham last year increased that dependence, and imports now provide more than half of UK diesel supplies. Ukrainian attacks on Russian refineries have also raised import costs. Britain no longer buys Russian diesel, but other countries still do, leaving buyers competing for a tighter supply, according to RAC policy chief Simon Williams.

US export threat adds another risk

US President Donald Trump has suggested stopping American producers from exporting diesel, although no ban has been imposed and views differ on how seriously to take the proposal. The US supplies around 17% of Britain’s diesel, making any restriction a significant risk. Experts cited by BBC Business say a ban could lower US prices initially but damage American production over time, potentially putting renewed pressure on domestic prices.

Williams cautioned that a brief fall in oil prices would not be enough to bring lasting relief. Shipping takes time, and wholesale price changes generally take about two weeks to reach forecourts.

RAC policy chief Simon Williams said pump prices need several weeks of lower oil prices—not merely a few days—before they can come down.

At home, a planned 5p fuel-duty increase due in September was postponed until the end of December. Williams said further cuts to that tax or VAT could help consumers. Retailers deny exploiting the conflict, and the markets regulator said it had found no evidence of crisis-driven changes to their pricing strategies. The next tests are whether oil prices stay lower for long enough, fuel shipments recover and Washington leaves diesel exports unrestricted.