Fuel prices start falling – but how long will they stay down as the US-Iran war continues?

The price of fuel is finally on the way down after weeks of surging prices in the wake of the US-Iran war.

While petrol and diesel prices started 2026 at a five-year low, there was a rapid rise in the price of oil after the US waged war on Iran on 28 February.

As petrol and diesel are made by enriching crude oil, a rise in wholesale prices after Iran shutting the Strait of Hormuz, a narrow waterway between Iran and Oman through which 20% of the world’s oil is transported, pushed up prices at the pump.

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At their worst on 14 April, the price of a litre of petrol increased by an average of 25.5p, and diesel by 49.2p, when compared to before the war broke out.

The average price of a litre of petrol has now fallen to 157p and is forecast to dip further, according to predictions by RAC fuel watch.

That being said, the price of a litre of petrol is still 24.7p (as of 21 April) more than it was before the war began, hurting the wallets of motorists across the country.

The price rises are worse for drivers of diesel vehicles who have seen the price of the fuel increase by 47.8p since the war began, reaching an average of 190p per litre on 21 April.

However, with instability still rampant in the oil markets, and the war in the Middle East still shocking the global economy, how sustainable will these price cuts be?

Why are oil prices volatile?

The price of oil has surged since the joint US and Israeli military action in Iran, which began on 28 February.

Oil prices increased because of the volatility these strikes have caused in the Middle East, where a large portion of the world’s oil supply originates, threatening global supply lines.

In particular, disruption to trade traffic through the Strait of Hormuz led to surging oil prices as ships are still unable to pass through safely despite a ceasefire being agreed.

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

Both petrol and diesel are derivatives of oil, meaning that any price fluctuations in the oil markets will naturally impact the price of fuel.

A good example of this can be seen 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.

This is similar to what is happening now, although to a lesser extent. A constrained global oil supply is leading to price increases for oil derivatives like petrol and diesel in the UK.

How long these price increases will continue will largely depend on the duration of the Iran war and when shipping will go back to normal through the Strait of Hormuz.

If a peace deal is reached soon and trade goes back to normal, then we can expect prices to keep falling. But if hostilities escalate again, we could see prices rise.

Simon Williams, head of policy at the RAC, said: "The cost of both petrol and diesel across the country has finally begun to drop very slightly. After record rises, drivers will be relieved to finally see prices going the other way.”

He said the RAC’s analysis of wholesale data on 20 April shows that the price of both petrol and diesel are set to continue falling this week as retailers start to buy stock at lower costs.

“While we're a long way from a return to the prices we had at the start of the conflict, there's now a glimmer of light at the end of the tunnel,” he added.

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 customers are attracted to their shops.

This, paired with rewards schemes that many run (such as Nectar at Sainsbury's and Tesco Clubcard) mean supermarkets often offer the best deals for petrol and diesel.

To find the best deals in your local area, it is a good idea to check Fuel Finder, a service provided by the government that shows you live prices in forecourts near you.

You can use this service to find where the cheapest petrol is and fuel up there, helping you save some extra cash.

To keep the cost of refuelling low, you should also try to stay away from the pumps at motorway service stations.

This is because service stations have a captive audience of drivers so charge more.

The average UK-wide price of unleaded is 157.47p, but this figure climbs to 181.32p for the average service station, according to the RAC.