Oil prices experienced a decline this week as optimism grew regarding a potential US-Iran peace agreement leading to the reopening of the Strait of Hormuz. The deal is expected to be signed between Tehran and Washington in Burgenstock, Switzerland, on Friday, although specific terms have not been disclosed. President Donald Trump stated that Iran has committed to never possessing nuclear weapons and that the Strait of Hormuz will be reopened promptly without toll charges.
Brent crude prices dropped below $80 per barrel, driven by expectations of the resumption of activities along the crucial shipping route. During the Iran war period, prices had surged above $120.
The RAC anticipates that the ongoing decrease in oil prices will bring relief to drivers who have been grappling with steep petrol and diesel costs in recent months. The current average price for unleaded petrol stands at 155.45p per litre, down from its peak of 159.53p on May 28. Similarly, the average diesel price now sits at 175.86p per litre, a decrease from its peak of 191.54p on April 15.
Simon Williams, the RAC’s head of policy, suggested that drivers could witness further price reductions at the pumps in the coming two weeks. He indicated that if oil continues to trade around $85, a level not seen since early March, petrol prices could potentially drop to 148p per litre from the current average of 156p. Diesel prices, currently at 177p per litre on average, could fall below 160p. Williams highlighted that before the war, an oil price of $70 translated to an average petrol price of 132p and diesel price of 141p.
Motorists are encouraged to utilize driving apps to compare fuel prices, enabling them to make cost-effective choices. UK forecourts are now mandated to report price updates to a Fuel Finder database within 30 minutes of any changes. This data is then shared with various apps, including Confused.com, DriveScore, Fuel Finder UK, Fuel Spy, MotorMouth, PetrolPrices.com, RAC Fuel Watch, and the AA, facilitating price comparisons for motorists.
Chancellor Rachel Reeves has also emphasized to petrol retailers their joint responsibility to keep prices reasonable for drivers.
