Why is the petrol price rising again?

Anyone filling up at the pump lately will have noticed that petrol prices are, once again, on the rise.

According to the RAC, petrol prices in December were the lowest they’ve been in the month since the pandemic. However, as of 23 January, they have since risen by 2p to 138.5p per litre for unleaded petrol. Diesel prices have risen by slightly over the same amount to 145.01p.

That pushes the cost of filling up a 55-litre petrol tank to over £76. An equivalent diesel tank will cost close to £80 to fill.

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Like most energy prices, fuel inflation is mainly driven by the oil price, though other factors do influence what we pay for petrol. Oil prices are set at the global level and, unfortunately, are priced in dollars, so British drivers can be stung by fluctuations in the exchange rate.

At present, British motorists are being hit by an incendiary blend of upward price pressures on fuel, including increasing oil prices and a weakening currency. On top of that, government legislation has mandated a new fuel standard that has added to what Brits are paying at the pump.

Are oil prices increasing?

Most drivers will remember the oil price shock that took place in 2022. Effectively, when Russia invaded Ukraine, the retaliatory sanctions placed on Russian goods by the US and its allies, including the UK, effectively restricted the oil supply available as Russia is one of the world’s largest oil producers.

This sparked global inflation, as almost all economic activity uses oil for energy at some stage in the process. Price increases were felt most acutely at the pump. The RAC’s Fuel Watch shows unleaded petrol spiked to 191.43p per litre in July 2022.

Thankfully, petrol prices have trended downwards ever since, though there are always bumps and spikes along the way, and January seems to be one of these.

Increasing oil prices are part of the problem. Brent crude has increased 5.7% since the start of the year in dollar terms, and for British motorists that is compounded by the pound falling 1.8% against the dollar in 2025 so far. In other words, pounds now buy fewer dollars, and those dollars buy less oil, so pounds now buy much less oil than they used to.

There is some good news in that both these trends have reversed over the last five days. Donald Trump’s return to the White House has prompted a fall in the dollar, and his “drill baby, drill” mandate could increase global oil supplies. If he is successful in bringing a swift end to the conflict in Ukraine, that could bring global oil prices down even further.

What else is driving petrol prices?

Unfortunately, while it is a major driver, the price of oil isn’t the only factor influencing the price of petrol.

As of 1 January, suppliers of petrol now have to include a greater amount of low-carbon, sustainable fuel.

The Renewable Transport Fuel Obligation (RTFO) is a piece of government legislation that mandates an annual increase in the amount of sustainable fuel included in the fuel mix. This rose from 13.563% in 2024 to 14.054% in 2025.

Sustainable fuel is (currently) more expensive than fossil fuels. According to PetrolPrices, this could add between 0.3 and 0.4 pence per litre to the wholesale cost of fuels.

Where can you find the cheapest fuel?

In general, supermarkets tend to be the cheapest places to fuel up as they have certain pricing advantages over specialist forecourt operators. They buy at large scale, so benefit from discounted wholesale prices, and they are incentivised to offer fuel cheaply in order to attract customers into their stores. They also benefit from customers using loyalty cards (like Nectar or Clubcard) when filling up their tanks.

_{Source: RAC Fuel Watch, 23 January}

Among other brands, Asda Express is currently the cheapest (or Essar, if you count Asda Express as a supermarket).

_{Source: RAC Fuel Watch, 23 January}

If you’re trying to keep the cost of petrol down, avoid filling up on the motorway if at all possible, as their captive audience makes motorway service stations the most expensive places to buy fuel.