LONDON, March 20, 2026, 13:08 GMT
British diesel prices could breach £2 a litre within weeks, traders warned on Friday, as Brent crude stayed above $110 after fresh attacks in the Middle East. That is putting fresh pressure on ministers. 1
Why this matters now is not just the forecourt. Diesel runs vans, lorries and farm equipment, so a sharp move higher can feed through into freight bills, shop prices and inflation, and the Bank of England said on Thursday it was ready to act if war-driven energy costs threaten its 2% target. 2
The timing is awkward for Chancellor Rachel Reeves. Fuel duty — the tax built into every litre sold — remains 5 pence lower only until the end of August, with the rate due to start rising again on Sept. 1 under plans published after Budget 2025. 3
That jars with the counter-case aired this week by the Economist, which said motoring in Britain had “rarely been so cheap” in real terms and argued against more relief at the pump. At Budget 2025, the government made a similar point, saying fuel prices were then at their lowest in real terms for a decade. 4
The recent move has been fast. By mid-March, average UK pump prices had climbed to 142.29 pence a litre for petrol and 162.06 pence for diesel, up 9.5 pence and 19.7 pence from Feb. 28 respectively, and RAC head of policy Simon Williams said petrol should stay below 148 pence if oil holds near $100 a barrel, but diesel is on a “crash course” for 170 pence. 5
Greg Newman, founder and chief executive of Onyx Capital, told the Telegraph he was “very confident the diesel price will surpass £2 a litre in the next month”. That would take the cost of filling a standard 55-litre tank to about £110, from £78 before the war. 1
The squeeze is not only showing up on futures screens. Brent rose to $110.32 a barrel by mid-session in London on Friday, while physical markets — where refiners buy actual cargoes rather than paper contracts — tightened harder still; Europe relies on the Middle East for diesel and jet fuel, and European diesel moved above $200 a barrel on Thursday. Ole Hansen of Saxo Bank said “the potential for a quick reversal” was slim because “damage has been done to production.” 6
Reeves said last week the government was weighing targeted help for poorer households, especially the more than 1 million homes that rely on heating oil and sit outside the energy price cap. Britain has so far stopped short of broad pump-tax relief; Italy has already cut fuel excise by 25 euro cents a litre and Spain was set on Friday to lower fuel VAT to 10% and suspend hydrocarbon duty, according to SER radio. 7
The monetary risk is rising with it. The BoE said inflation could reach 3.5% over the next two quarters, and Governor Andrew Bailey said higher petrol prices were already feeding through, while Pantheon Macroeconomics’ Rob Wood said energy futures were on the “borderline” of levels that could justify a rate rise. 2
But the path from here is still unclear. The United States and its allies say they are ready to help secure shipping through the Strait of Hormuz, Washington has floated further releases from strategic oil reserves and possible sanctions relief for some Iranian cargoes, and the International Energy Agency on Friday urged measures from home working to slower road speeds to cut demand; Fatih Birol, the agency’s executive director, called them “immediate and concrete measures” to shelter consumers. If those steps fail and Gulf damage drags on, the British debate over whether driving is still cheap in real terms may not last much longer. 6
