Fuel prices this week:

Fuel Market Update – What’s Happening at the Pump?

Oil prices have risen slightly compared to last week, due to renewed optimism over U.S.-China trade talks, supply concerns from Canadian wildfires, and expectations of potential interest rate cuts in the U.S.

Supply concerns

Wildfires in Alberta, Canada, disrupted nearly 10% of the country’s oil exports, creating a short-term supply shock that pushed prices upwards. At the same time, OPEC+ announced plans to increase output for the third consecutive month, with more hikes likely in August and September. 

Short-term supply tightening (Canada) vs. longer-term supply expansion (OPEC+) creates a delicate balance between supply and demand, temporarily easing oversupply concerns. However, speculation about OPEC+ August/September increases the risk of oversupply in the second half of the year, which could impact prices later.

Socio-economic factors

The U.S. services sector contracted in May for the first time in almost a year, while US unemployment claims increased for the second consecutive week, indicating a weakening labour market. There is hope that the U.S. Federal Reserve might cut interest rates to stimulate growth, boosting oil demand by making borrowing cheaper.

The overall health of the economy can be an indicator of future energy demand. A contracting services sector and rising unemployment suggest slower economic growth and weaker consumer spending, typically leading to lower oil and fuel demand. However, rate cuts could reduce borrowing costs, boosting economic activity and increasing oil demand.

Trade and political tensions

Reports of Trump and Xi Jinping’s positive phone call was seen as sign of easing U.S.-China trade tensions – good news for global trade and economic growth. This improved investor confidence, along with reduced fears of a major trade war that could hurt oil and other commodities demand. Meanwhile, Canada is negotiating with the U.S. to have tariffs lifted, which could help stabilise trade flows and energy exports.

Russia carried out extensive drone and missile attacks on Ukraine’s capital and several other regions early Friday, resulting in at least three deaths and injuring 49 others, according to Ukrainian President Volodymyr Zelensky. As two major oil producers, these ongoing tensions raise concerns about potential disruptions to energy supplies, increasing geopolitical risk and supporting higher oil prices.

Once political allies, Elon Musk and Donald Trump are now engaged in a public feud. Musk criticised Trump’s major spending bill and cuts to clean energy initiatives, prompting Trump to threaten to revoke subsidies for Musk’s companies. As a result, Tesla shares plummeted by around 15% in one day. Musk also supported Trump’s impeachment and cited his alleged ties to Jeffrey Epstein, further intensifying market reactions and political backlash. While the Musk-Trump feud doesn’t directly move oil prices, their clash over clean energy policy could influence long-term demand dynamics between renewables and fossil fuels.

Looking Ahead

On balance, we predict the market will trade slightly higher going into next week, but ongoing global conflicts could impact pricing in the coming weeks.

Fuel prices this week:

Fuel Market Update – What’s Happening at the Pump?

Oil prices fell slightly this week. Uncertainty around oversupply and lower demand can often lead to lower fuel prices for consumers at the pump. Prices this week have been driven by speculation over OPEC+’s next move, slow demand, and ongoing uncertainty around trade.

OPEC+ may increase oil production in July

With a meeting of eight key OPEC+ members due to take place on saturday, there is speculation that the group will raise output again during July. Together, OPEC+ controls over 40% of global oil supply and the group meet regularly to decide whether to increase or cut oil production. Their decisions can raise or lower oil prices globally, affecting fuel, transportation, and energy costs. If they increase their output – especially at a time of steady or weak demand – oil prices, and fuel orices at the pump, may fall. 

Global oil demand rose, but less than expected

Even though people are using more oil, the increase is around 250,000 bpd less than analysts had predicted. Weaker demand than expected can be a signal of slower economic activity or consumer spending. If supply keeps growing and demand doesn’t keep up, oil prices fall. 

Tariffs in the U.S. continue to cause uncertainty

The situation with US traffics continues to be a bit of a rollercoaster. Earlier this week, a trade court put a block on many of the duties – a decision overturned by the federal appeals court on Thursday. Analysts have said that the uncertainty will remain as the tariff battles are dealt with by the courts. Trade tensions (especially with China) can hurt global economic growth – a slower economy means people and businesses use less oil, and discourages investment and reduces demand, which can pull prices down further.

Geopolitical tensions 

President Trump is growing frustrated with both Ukraine and Russia, sparking fears he might abandon mediating peace talks. Trump called Putin’s actions irrational and inhumane, while Putin dismissed Trump as overly emotional. This could push prices up because markets will be cautious about the possibility of prolonged conflict, potential sanctions on Russian oil, or disruptions to supply routes. This uncertainty often leads traders to put prices up before any actual supply issues occur.

Looking Ahead

On balance, we predict the market will trade stably going into next week, but potential changes in supply (from OPEC and Iran) and ongoing global conflicts could impact pricing in the coming weeks.

Fuel prices this week:

Fuel Market Update – What’s Happening at the Pump?

The oil and fuel markets are holding steady compared to last week, but several global factors are influencing what we might see next at the pump. 

OPEC supply discussions

OPEC is considering increasing oil output for June and July, after already supplying more oil than usual in May. No final decision has been made yet, but this – along with the prospect of also additional Iranian Oil entering the market – has added to oversupply concerns. Basic supply and demand means more supply can help lower prices at the pump. However, too much can cause market instability.

US-Iran nuclear talks

Negotiations between the US and Iran continue, with the possibility of lifting sanctions on Iranian oil exports. If Iranian oil re-enters global markets, it could ease supply pressures and help stabilise or even lower fuel prices. However, as noted above, there are ongoing concerns around oversupply. 

Trade deals and tarrifs

A new trade agreement between the EU and the UK – which the government claims will add nearly £9 billion to the UK economy by 2040 – has added some stability to global markets. Meanwhile,  Donald Trump’s recent announcement of a 50% tariff on all European Union (EU) imports, set to begin on June 1, 2025, has introduced uncertainty into global markets. Trade deals can reduce uncertainty and support steady economic activity, while sanction often unstelle things – both, in turn, affect energy demand and pricing.

Tensions in the Middle East

Ongoing conflict in Gaza and Israel’s recent military escalation have caused concern among international allies. Free trade talks have been suspended.
Instability in key oil-producing regions can cause supply fears, pushing prices higher due to perceived risks. Geopolitical conflict can disrupt oil production or transport routes, which often results in price spikes.

Looking Ahead

We expect fuel prices to remain relatively stable in the short term, but potential changes in supply (from OPEC and Iran) and ongoing global conflicts could impact pricing in the coming weeks.

Fuel prices this week:

Prices have risen this week. Factors influencing pricing include easing tensions between the US and China, US-Iran nuclear talks and OPEC+ supplies. 

US-China and the impact of the global economy   

Early this week, the United States and China announced a 90-day pause on tariffs. The ongoing threat of a trade war between the world’s two biggest economies – and biggest oil consumers – has caused concerns of an trade war, which would have impacted the global economy and oil demand. This pause has temporarily relieved global markets, easing fears of an imminent economic slowdown, leading to a modest rebound in oil prices. However, uncertainty remains high, and any signs of renewed friction could quickly cause oil prices to fall again. 

How the US-Iran nuclear deal influences fuel prices  

Donald Trump said on Thursday that the United States was getting close to securing a nuclear deal with Iran. If sanctions on Iran are lifted as part of a nuclear deal, Iran could boost its oil exports by around 400,000 barrels per day. This increase in global supply could impact the fuel price at the pumps – when supply increases and demand stays the same, oil prices tend to fall, and prices at the pump often follow. However, this could be offset by other factors.

OPEC+ production hikes impact prices on the forecourt 

This week, OPEC+ – which includes key oil producers like Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman – agreed to increase their collective output by 411,000 barrels per day (bpd) in June 2025. This decision marks the second consecutive month of such increases, following a similar rise in May. When OPEC+ increases oil production, it adds more oil to the global market. If demand remains stable, this additional supply can lead to cheaper or more stable fuel prices at the pump.

Fuel prices this week:

Prices are slightly lower this week, mainly influenced by concerns about an economic slowdown, ongoing uncertainty around US tariffs, and OPEC+ production hikes.

Global economic slowdown

Oil prices have dipped slightly since last Friday amid global economic concerns, particularly signs of a slowdown in China and the US. Weakening industrial activity and sluggish manufacturing output in China have dampened energy demand. Meanwhile, a record-high trade deficit and a sharp decline in consumer confidence have raised fears of reduced economic activity in the United States.

These changes often indicate lower future demand for oil, contributing to the recent price reductions.

US sanctions

US sanctions are still impacting oil prices. However, Beijing is reportedly “evaluating” an offer from the US to engage in trade negotiations. Complicating any talks was a threat from Trump to impose secondary sanctions on buyers of Iranian oil – China is their biggest buyer.

This situation can influence fuel prices at the pump because trade tensions (or progress) between the US and China directly affect global economic activity, affecting oil demand and prices.

OPEC+ production output may fuel oversupply fears

A new Bloomberg survey published on Thursday showed that April output dropped by 200,000 barrels per day (bpd) – instead of the planned hikes. There are expectations that OPEC+ will increase production during June, with big player Saudi Arabia indicating that they are no longer prepared to prop up oil prices with further supply cuts. Eight OPEC+ countries will meet on May 5 to decide on a June output plan. OPEC+ countries are expected to see rising domestic oil consumption in May because of increased cooling demand.

This situation influences fuel prices at the pumps because expectations of increased oil production can lead to oversupply fears, which generally cause crude oil prices to fall. Fuel prices are closely linked to the global price of crude oil.

BP shares drop

The recent fall in oil prices has disrupted BP’s financial planning, contributing to a sharp decline in cash flow and profits, a $4 billion increase in net debt, and shares falling nearly 4%. Market analysts described the results as weak but not surprising.

Lower oil prices and weak corporate earnings from major oil producers like BP can reduce consumers’ fuel costs. However, if oil companies cut production or investment in response to financial strain, this could tighten supply in the longer term and push prices back up.

The pricing outlook for next week

Fuel prices this week:

Oil prices dropped earlier this month after the tariffs sparked concern about global demand. Last week saw a week-on-week rise of 7%, driven by hopes of a trade deal between the United States and the European Union, as well as new U.S. sanctions aimed at curbing Iranian oil exports. 

Prices fell on Friday, resulting in them being down overall this week. Concerns about oversupply from OPEC+ and speculation about ongoing trade and tariffs are influencing prices. On Sunday, President Trump said there would be some exceptions to the tariffs, which eased concerns slightly. Prices rose in anticipation of tariff negotiations between China and the US, but later fell after a Chinese foreign ministry spokesperson stated that there had been no such development.

Russia has continued with drone attacks on Ukraine, with a refinery in the Komsomolsk-on-Amur region catching fire from a retaliation attack. The US president has claimed that a deal to end the war was close. Meanwhile, a halt to Russia’s war in Ukraine and the easing of sanctions could allow more Russian oil to flow to global markets. Russia, a member of the OPEC+ group that includes the Organisation of the Petroleum Exporting Countries, is one of the world’s largest oil producers, alongside the U.S. and Saudi Arabia.

Rising tensions between the U.S. and Iran are also impacting oil prices. As well as the uncertainty due to renewed nuclear negoations, increased sanctions may limit Iran’s ability to sell oil globally, restricting supply and pushing prices up. 

Meanwhile, the pound has continued to make gains against the dollar, and favourable trade outlooks between the U.S. and the UK are underway.

The pricing outlook for next week

Fuel prices this week:

Oil prices fell dramatically this week due to ongoing fears that Donald Trump’s latest tariffs could spark a global recession. There is speculation that this could mean cheaper fuel for drivers, with commentary from the RAC saying that fuel prices could fall to their lowest level since 2021.

US Tariffs

The sharp drop in oil is mainly due to concerns that the tariffs will slow down the global economy, reducing demand for fuel. On Wednesday, oil prices hit a new four-year low after China struck back at the U.S. by announcing much higher tariffs on American goods. China’s finance ministry hit back saying it would raise tariffs from 34% to 84% in response to President Trump’s decision to enforce a 104% tariff on Chinese imports earlier this week.

Supply and demand

Supply and demand issues also impacted pricing this week. In response to the tariff situation, Saudi Arabia, the world’s largest oil exporter, lowered its prices for Asian buyers to stay competitive. On Tuesday, the 2,700-mile Keystone oil pipeline ruptured. Canadian regulators say the pipeline transports more than 26 million gallons per day on average, so any downtime halts the flow of millions of gallons of crude oil from Canada to refineries in the U.S. – potentially leading to higher prices.

Fuel prices this week:

Oil prices have fallen in comparison to last week. The decline is linked to concerns about U.S. tariffs, economic slowdown, and a surprising production hike from OPEC+​

US Tariffs 

On Wednesday, President Trump announced significant import tariffs on countries across the world,  including China (34%), India (26%), Japan (24%), the EU (20%), and the UK (10%). Oil prices plunged 8% on Friday as China hit back, imposing an additional 34% on all US goods. As other nations consider whether to retaliate, the announcement of the highest tariffs in more than a century caused a sharp drop in global financial markets. The dollar is also failing, raising concerns about a potential US recession. 

Although oil was exempted from the tariffs, it is anticipated that they will increase inflation, slow economic growth and create a “trade war”. This will hurt economic growth which will, in turn, slow demand for oil. 

OPEC production hikes 

Key members of the OPEC group (Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman) agreed to increase their joint oil output by 411,000 barrels per day in May – well above the estimated increase of 140,000 barrels. Trump’s tariff threats on key OPEC+ members (Russia, Iran, and Venezuela) could curb their supplies, countering planned output increases.

Transport issues could impact supply 

Rhine water levels have dropped to a 12-month low – a key route for moving crude oil to inland refineries and storage facilities. When water levels drop, barges must reduce cargo loads or halt operations altogether, leading to supply bottlenecks and potential price increases. This can also force a shift to alternative transport methods, such as rail or trucks, which are less efficient and more expensive.

Fuel prices this week:

Early this week, oil prices rose due to growing concerns over possible U.S. tariffs on Venezuela and a larger-than-expected drop in U.S. crude oil inventories. Both of these factors could influence supply, pushing prices up. Prices continued to rise on Friday, fueled by fears that U.S. trade tariffs could trigger a global recession. This is the third consecutive week of oil price increases.

US sanctions and inventories

Despite concerns over a potential recession, oil demand remains stable. US inventories fell by 4.6 million barrels in the week to March 21, exceeding expectations and signalling strong demand.

On Monday, President Trump signed an executive order authorising a blanket 25% tariff on imports from any country purchasing Venezuelan crude oil and liquid fuels. This led to immediate reactions in the market, with China – Venezuela’s largest buyer – halting oil purchases and India’s Reliance Industries – operator of the world’s biggest refining complex – also planning to stop Venezuelan oil imports.

Analysts predict tighter supply in the second quarter if Venezuelan and Iranian exports decline.

OPEC

Meanwhile, OPEC+ is set to gradually increase production in April, with further rises expected in May.

Geopolitics

Geopolitical factors are also adding volatility. Sanctions are driving prices higher, but ongoing discussions between the U.S., Russia, and Ukraine regarding hostilities and uncertainty about ceasefires in the Black Sea are creating counterpressure and market instability. Additionally, a stronger U.S. dollar has made crude more expensive for international buyers this week.

Fuel prices this week:

Fuel prices have remained relatively stable, with just a slight reduction compared to last week’s price per litre. With speculation from the RAC suggesting that the wholesale cost of oil will reduce the pump price, we explore the factors influencing prices this week.

Geopolitical and economic uncertainty

US policies – including reciprocal tarrifs between trading partners Canada, Mexico and China – have increased uncertainty for businesses, consumers and investors, prompting concerns of a recession. Geopolitical tensions also drive volatility, with Ukraine’s attacks on Russian refineries raising supply concerns. In the Middle East, Houthis threatened Red Sea attacks over Gaza aid.

Supply and demand

European diesel supply is tightening, but demand remains strong. Despite low inventories in the U.S. and Europe, reduced Russian exports, and strong demand, refining margins have dropped below seasonal averages. This disconnect is likely due to rising trade tensions, particularly U.S. tariffs, and geopolitical uncertainty, including a potential Ukraine ceasefire.

Tightening of oil supplies

Prices rose slightly today (Friday) after the U.S. Treasury announced new sanctions on Iran, including those on China-based Shandong Shouguang Luqing Petrochemical Co., Ltd, which purchases Iranian oil. Because of tighter sanctions, analysts expect a 1 million barrels per day (bpd) reduction in Iranian crude oil exports.

In early March, OPEC+ confirmed that eight members would increase output by 138,000 bpd from April. However, this week, OPEC+ issued a new schedule requiring seven member nations to cut production to compensate for past overproduction. These compensatory cuts will outweigh the planned output increases, tightening supplies and potentially pushing prices up.

Meanwhile, escalating Middle East tensions, including U.S. strikes on Houthi positions in Yemen and Israeli operations in Gaza, have raised concerns about potential supply disruptions. In addition to impacting supply, ongoing Red Sea disruptions have driven up shipping costs and increased transit times for fuel shipments from Asia and the Middle East to Europe. This could result in price increases.