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Sir Keir Starmer’s value of residing tsar has referred to as on the UK authorities to rethink its deliberate gas responsibility enhance in September, as rising pump costs within the wake of the Iran battle add to stress on family funds.
Lord Richard Walker, govt chair of retailer Iceland, on Friday mentioned ministers ought to take a look at “extending . . . or enlarging” the present 5p-a-litre lower, which is because of expire later this 12 months.
Walker, who because the prime minister’s “cost of living champion” since February is exploring measures to assist households with their payments, pointed to a latest transfer by Australia to scale back gas tax by about 14p a litre.
“I feel, given the place we’re, we do should be considering and speaking about extending it or enlarging it [the UK fuel duty freeze],” Walker informed the BBC.
His feedback got here as UK motorists are set to face £2-a-litre diesel costs inside days after wholesale costs surged to a four-year excessive, including to value of residing pressures which have been reignited by the Middle East conflict.
Alan Gelder, an oil merchandise skilled at Wooden Mackenzie, mentioned diesel costs on the pump have been anticipated to surpass £2 a litre inside every week after European diesel futures reached the equal of $211 a barrel, virtually double the worth of crude oil.
The lack of provides from the Center East has pushed up oil costs internationally however diesel has had a number of the most speedy positive aspects, with the world’s consumers jockeying for the remaining provides.
Center Jap refiners have turn out to be extra important to European diesel provides in recent times after restrictions have been positioned on purchases from Russia following its full-scale invasion of Ukraine in 2022.
“Day by day that passes, the oil market will get tighter so costs proceed to climb,” Gelder mentioned. “Diesel costs might effectively go a lot larger.”
Already, UK motorists noticed the very best month-to-month rise in prices for diesel and petrol on report in March, based on figures compiled by RAC.
The price of unleaded petrol on the pump rose 20p a litre and greater than 40p for diesel final month. Diesel is promoting for a median of £1.85 a litre, based on RAC information.
“Gas costs have by no means risen this quick in a single month,” mentioned RAC head of coverage Simon Williams. “The will increase drivers have needed to endure in March 2026 far exceed these seen within the early days of the battle in Ukraine.”
The Iranian menace to delivery by means of the Strait of Hormuz continues to forestall most oil from the Gulf reaching world markets and stockpiles are being eroded as international locations dip into industrial and strategic reserves.
The UK imports solely a few tenth of its diesel immediately from the Center East, however about 40 per cent of the UK’s diesel comes from Dutch and Belgian refineries, which get a good portion of their crude from the Center East.
Starmer final month mentioned he would keep “under review” the plan to finish the gas responsibility freeze, in place since 2011, and crack down on “value gouging” by unscrupulous petrol retailers profiting from fluctuating market costs.
The UK authorities has additionally privately sought to calm fears about potential provide shortages. However vitality merchants and gas suppliers have warned that petrol stations and refineries might run down their stockpiles of diesel by mid-Might if the battle in Iran shouldn’t be resolved.
Increased diesel costs feed by means of quickly into inflation as most items within the UK are transported by diesel-powered vehicles.
Whereas international locations throughout Europe face related pressures, the issue going through the UK was acute, mentioned Benedict George, head of refined merchandise at Argus Media, arguing that the nation’s diesel shares have been decrease than these of different European international locations.
Extra reporting by Ashley Armstrong in London
