Fuel prices fall as Iran-US peace deal nears – how much is a litre of petrol?
Fuel prices have started to fall as the end of the Iran war looks to be in sight. How much will it cost to fill up your car?
Fuel prices are on the way down as major hostilities between the US and Iran seem to be calming and a peace deal could be on the horizon.
The price of oil surged after the war began on 28 February, remaining at a volatile level between around $90 and $110 for almost four months as the war raged on.
As petrol and diesel are made by enriching crude oil, when oil prices rise so do fuel prices. This brought the price of petrol to a peak of around 159p per litre on 29 May – far above the five-year low they started 2026 at.
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But markets calmed upon news that the war looks set to wind down, leading to significant drops in the prices of oil and fuel.
The price of a litre of petrol is now around 152p. This is over 19p higher than it was before the conflict began on 28 February, but below May’s peak when the average litre of petrol was almost 27p more expensive than before the war.
With petrol prices at this level, it means filling up a car with a 50-litre tank will cost you around £76.
Diesel prices have surged much more than petrol prices, but have also dropped.
The average price of a litre of diesel is 169p, around 27p more than it was before the conflict, but down from the April peak when prices were 49p higher than pre-war levels. A full 50-litre tank will set you back around £84.
Why are oil prices volatile?
The price of oil has been incredibly volatile since the start of the war on 28 February. Prices were around $72 before the war and peaked at $114 during May, though stayed between $90 and $110 for the most part.
Oil prices increased because of the volatility the conflict 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, a narrow waterway between Iran and Oman through which 20% of the world’s oil and gas is transported, led to surging prices as most ships were unable to safely pass through.
Since both countries announced they would sign a memorandum of understanding to wind down the war, oil prices have plummeted.
As of June 26, oil prices are around $72 – back at the level they were before the conflict began – however, experts have warned that prices could quickly rise again if a peace deal is not reached or hostilities begin again.
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 whether a sustainable peace deal is reached between the US and Iran, and whether shipping will return to normal through the Strait of Hormuz.
If a peace is reached and conflict is not reignited, we can expect prices to stay below their wartime levels. But if a peace cannot be negotiated, we could see prices rise again.
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 151.98p, but this figure climbs to 172.09p for the average service station, according to the RAC.
