Full Breakdown
Rising Fuel Costs in the UK Amid Ongoing US-Israel-Iran Conflict
3/19/2026, 7:05:35 AM
Impact of the Conflict on Fuel Prices
The ongoing conflict involving the US, Israel, and Iran, which escalated on February 28, has led to significant increases in fuel prices in the UK. As of March 18, the price of a barrel of Brent crude oil surged from $73 to approximately $108. This spike in wholesale oil prices has directly impacted motorists, with average petrol prices rising by 9.8 pence to 142.62 pence per litre and diesel prices increasing by 20.3 pence to 162.66 pence per litre. Analysts indicate that for every $10 increase in oil prices, pump prices rise by about 7 pence per litre. The RAC predicts that if oil prices remain around $100, petrol could reach 150 pence per litre and diesel could approach 180 pence.
Broader Economic Implications
The rise in fuel costs is expected to have a cascading effect on the prices of other goods, particularly food. Increased transportation costs for businesses are likely to be passed on to consumers, potentially leading to higher prices in supermarkets. Benjamin Godwin, a partner at PRISM Strategic Intelligence, noted that some crude oil components are used in fertilizers, which could further affect food prices. However, if the conflict is short-lived, the immediate impact on food prices may be limited.
Government Response and Economic Outlook
In response to the rising costs, Prime Minister Keir Starmer's government has prioritized reducing living costs. A £53 million support package has been announced to assist vulnerable households, particularly in Northern Ireland, where heating oil prices have surged. The government faces pressure as higher fuel prices could hinder its efforts to manage inflation, which had been expected to decrease. The Bank of England's interest rate strategy may also be affected, as higher energy costs could delay anticipated cuts in interest rates.
Historical Context and Political Sensitivity
The sensitivity surrounding fuel prices in the UK is historically significant. Previous fuel protests in 2000, driven by rising petrol and diesel taxes, led to widespread disruptions, including school closures and rationing. The current government is wary of repeating such events, especially as rising costs could provoke public backlash. The freeze on fuel duty, initially introduced as a temporary measure 15 years ago, has cost the Treasury billions and remains a contentious issue.
Conflicting Reports & Gaps
While the RAC and other analysts provide forecasts on fuel price increases, there is uncertainty regarding the duration of elevated oil prices and their broader economic impact. The Bank of England's next rate-setting committee meeting will be crucial in determining the future of interest rates in light of these developments.
Verbatim Quotes
“I would say the prudent course for the Bank of England would be to remain on hold,” — Subitha Subramaniam, Chief Economist, Sarasin & Partners
“Some elements of crude oil are used in fertiliser, and so there could be a cost implication in terms of food prices,” — Benjamin Godwin, Partner, PRISM Strategic Intelligence
“The sensitivity of American consumers toward higher gasoline prices is well known.” — CNBC UK Exchange Report
