Why UK diesel prices have breached the £2 per litre mark

The price of diesel in the UK has surpassed the £2 per litre mark for the first time, driven by the ongoing conflict between the US and Iran in the Middle East. The RAC motoring body reports the average price of a litre of diesel at the pump is now 200.01p. This spike in diesel prices is attributed to the disruption of oil production and transportation in the Middle East due to the war, pushing the cost of fuels made from crude oil higher.

In July, the price fell after a framework deal was agreed, but it has since risen again as tensions escalated.

Trump's administration is considering a ban on US diesel producers selling overseas, which could further increase UK prices. Furthermore, the US's role in the Middle East is significant, as it supplies around 17% of the UK's diesel needs. This dependence on US diesel imports makes the UK vulnerable to any potential US actions, such as a blockade or ban on exporting diesel, which could exacerbate the price increase.

Although the government has not seen evidence of retailers engaging in price gouging, the RAC suggests that lower fuel duty or reduced VAT could ease the burden on consumers. Nonetheless, diesel's heavy use in agriculture and haulage means that even non-diesel car owners could be affected by the rise in diesel prices, as it impacts the cost of transporting essential goods, including food, across the UK.