Will petrol prices rise this year?

Motorists filling up at the pump have had relatively little to fear so far in 2025.

Though the price of petrol rose by a few pennies per litre at the start of the year, there has been a sustained decline in fuel prices in the first half of 2025, with prices reaching a four-month low in May.

Since then, petrol prices edged up slightly in June, with the average price of a litre of unleaded sitting at 133.59p, according to the RAC.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

That means the cost of filling up a 55-litre petrol tank is just over £73, while an equivalent diesel tank will cost you around £77.

However, a continued fall in petrol prices could be under threat after Israel bombed Iran’s nuclear facilities on 13 June and the United States carried out a similar strike on 22 June, prompting a sharp rise in the price of oil.

Petrol and diesel are made by enriching crude oil, meaning that when wholesale prices of oil increase, the price at the pump also increases.

What’s more, oil prices are set at the global level and, unfortunately for Brits, are priced in dollars, so drivers in the UK can be stung by fluctuations in the exchange rate.

With instability rampant in the oil market and escalating tensions in the Middle East, we look at the outlook for petrol prices in 2025.

Why are oil prices volatile?

The price of oil surged on 13 June when Israel launched a missile strike on Iran, targeting its nuclear facilities.

Israeli officials say the strike was necessary to curb the Iranian nuclear programme, as they feared the nation was close to developing a nuclear weapon.

The price of a barrel of Brent crude oil stood at around $70 before Israel’s strike, but jumped to around $76.77 in its wake. Through the following week, the price of oil was extremely volatile, but stayed well above levels before the conflict.

There was even more tumult in the market after US president Donald Trump ordered the bombing of three of Iran’s nuclear facilities on 21 June, prompting questions over whether or not Iran would retaliate and whether the US will continue its involvement in the conflict.

When markets reopened on 23 June after the American strike, the price of a barrel Brent crude oil soared from around $77.20 to just over $79 – a far cry from the $69 figure before the strikes took place.

A retaliatory strike was subsequently sent by Iran targeting a US military base in Qatar before a ceasefire deal was signed by Iran and Israel in the early hours of 24 June (UK time).

Mere hours after the ceasefire was agreed, though, Israel alleged that Iran broke its terms and fired more rockets at Iran.

Oil prices plummeted after Iran’s strike on the US military base in Qatar, and kept falling despite the ceasefire being broken.

The price of a barrel of Brent crude oil stands at around $69, at the time of writing, around the same that it cost just before the conflict began.

What does turbulence in the oil market mean for petrol prices?

As previously mentioned, petrol is a derivative of oil so any fluctuation in the price of oil will naturally impact the price of petrol.

We saw this in 2022, when oil prices soared in the wake of Russia’s invasion of Ukraine and countries across Europe, including the UK, restricted the oil supply available to Russia. Petrol prices spiked to 191.43p per litre in July 2022.

If the conflict between Iran and Israel continues, fears over a similar rise in petrol prices will grow, as restrictions in the oil supply will impact costs.

Victoria Scholar, head of investment at interactive investor, said: “There are worries that the conflict in the Middle East could manifest itself as yet another cost-of-living pressure for consumers by pushing up the price of petrol at the pump.”

Scholar notes that before this month, petrol prices were falling, but that “drivers filling up at the forecourt could be set for steeper petrol and diesel bills if oil prices continue to rise”.

However, the markets seem to be optimistic for the time being that deescalation will continue, reflected in the falling price of oil since the evening of 23 June.

Where can you find the cheapest fuel?

Supermarkets are often the most cost-effective places to fill up your tank as they benefit from economies of scale when buying in bulk, and are especially incentivised to offer a good deal so that customers are attracted to their shops.

This, paired with rewards schemes that many run (Nectar, Clubcard) mean that supermarkets often offer the best deals for petrol and diesel.

Right now, the best supermarket on average to fuel up your car is Tesco, where petrol costs around 129.4p per litre.

Source: RAC Fuel Watch, 24 June

Among other brands, Essar is currently the cheapest.

Source: RAC Fuel Watch, 24 June

When you are trying to keep the cost of fueling up low, you are best advised to stay away from motorway service stations and their pumps.

This is because service stations are able to exploit their captive audience and can afford to charge them more.

To illustrate this, RAC notes that the average UK-wide price of unleaded is 133.59p, but this figure climbs to 158.12p for the average service station.