Fuel prices this week:

Fuel prices: What’s Happening at the Pump?

Oil markets have remained relatively stable this week, with prices on track for slight weekly declines. However, fuel markets remain on edge as escalating geopolitical tensions threaten to drive prices sharply higher. For UK motorists, that means continued volatility at the pump – and the potential for significant price increases if global events worsen over the coming days.

UK and US Sanctions on Russia

US threatens secondary sanctions

President Trump has threatened sweeping secondary sanctions on Russia unless a ceasefire in Ukraine is reached within 50 days. The President has expressed frustration with President Putin’s intensified attacks and is preparing to send further military aid to Ukraine. If the U.S. enforces sanctions on third-party buyers of Russian oil, many countries and companies may be forced to pull back from importing Russian crude, even if they currently rely on it. This would reduce global oil supplies, creating a supply crunch, which typically pushes prices up sharply.

EU sanctions on Russian oil

The EU has introduced its toughest sanctions yet on Russian oil, lowering the price cap to well below market value and blacklisting over 100 shadow fleet tankers to restrict exports. Bans on refined fuel imports and pipeline transactions have been put in place. These sanctions aim to tighten enforcement and reduce Russia’s oil revenues – increasing the risk of global supply disruptions and higher fuel prices.

Supply and demand

Drone strikes add to supply concerns

Drone strikes in Iraq’s Kurdish region have also significantly disrupted oil production. The attacks, which are believed to be linked to Iran-backed militias, have slashed output from 280,000 barrels per day to just 130,000. Prices briefly spiked by $1 earlier in the week as traders responded to the news, which could impact global supplies and, in turn, edge prices up. 

OPEC Production Increase May Fall Short

All eyes are also on OPEC, with a long-anticipated production boost due in two weeks. However, analysts warn that it will fall short of current global demand, particularly in light of the disruptions in Iraq and broader geopolitical instability. This imbalance between supply and demand could place additional upward pressure on crude prices as global sanctions begin to take effect.

Tariff turbulence from the U.S.

Meanwhile, the U.S. tariff deadline on global energy exports is less than two weeks away. Countries are working hard to negotiate reduced-tariff deals to avoid steep penalties, adding another layer of uncertainty to pricing.

Tariffs create uncertainty in global trade, which can rattle markets and indirectly affect oil prices. If trade tensions escalate, especially involving major energy importers or exporters, we could see oil price volatility increase. That instability often pushes wholesale fuel prices up as supply chains are disrupted.

Looking ahead – oil and fuel prices next week

Despite the relative calm this week, the fuel outlook for UK drivers is anything but settled. Wholesale prices have held steady, for now, but market dynamics suggest that could change quickly. If sanctions tighten, OPEC underdelivers, or Middle East tensions escalate further, UK pump prices may begin to rise before the end of the month. 

Fuel prices this week:

Fuel prices: What’s Happening at the Pump?

UK drivers have seen fuel prices fluctuate sharply over recent months, and this week is no exception. Several global events are converging to influence what we pay at the pump – from oil production decisions to geopolitical tensions and tariff developments. Here’s a look at the key factors shaping fuel prices right now, and what they could mean for motorists in the UK.

Supply and demand 

OPEC+ turns the taps on 

Over the weekend, OPEC+ surprised markets by announcing a larger-than-expected oil production increase for August. This move was welcomed by traders and analysts alike, as it signalled that OPEC would meet rising global demand amid the busy summer season. 

Demand still outpacing supply

Even with more oil coming online, global demand is holding firm, especially with ongoing travel booms and industrial activity picking up in many regions. This tight supply-demand balance continues to keep oil prices under pressure. 

Supply expectations

The IEA has increased its forecast for oil supply growth this year, while slightly trimming its expectations for demand. This points to the risk of oversupply later in 2025.

Summer demand 

Despite forecasts pointing to a potential oil surplus later in the year, the International Energy Agency (IEA) warns that the market may be tighter than it looks in the near term. Analysts report that people are travelling in large numbers, both by air and on the road. This trend is driving up short-term demand. Peak summer refinery activity is boosting fuel production to meet surging travel and electricity demands.

Also worth noting 

Saudi Arabia is shipping its largest amount of crude oil to China in over two years — another sign that near-term demand remains strong globally. Russia says it will compensate for previous overproduction in August and September, adding more barrels to the market.

In theory, a higher oil supply should help stabilise or slightly ease wholesale fuel prices. However, with demand still strong globally, any gains could be short-lived. If global demand continues to exceed supply, even modest production increases might not be enough to prevent further rises in wholesale fuel costs, which feed through to forecourt prices in a matter of days.

Tariff Turbulence from the U.S.

Another major development affecting oil markets is geopolitical uncertainty. U.S. tariffs are set to be reintroduced on August 1, following a 90-day pause. President Trump has warned that no extensions will be granted, and has signalled that further tariffs may be imposed against countries like Japan, South Korea, Canada, and beyond. He’s even hinted at doubling existing tariffs.

Tariffs create uncertainty in global trade, which can rattle markets and indirectly affect oil prices. If trade tensions escalate, especially involving major energy importers or exporters, we could see oil price volatility increase. That instability often pushes wholesale fuel prices up as supply chains are disrupted.

Geopolitical Jitters: Russia, Sanctions, and Trump

Beyond tariffs, geopolitical tensions are flaring again, this time with Russia back in focus. President Trump has hinted at a “major” announcement on Russia, stoking speculation around further sanctions. Meanwhile, the EU is preparing a floating price cap on Russian oil, in response to Russia’s ongoing bombardment of Ukrainian cities. While Russia says it can handle the pressure, these developments inject fresh uncertainty into global oil supply dynamics.

Any escalation in sanctions or supply disruptions, particularly involving Russia, could push oil prices higher, keeping pressure on UK pump prices even if supply appears healthy on paper.

Looking ahead – oil and fuel prices next week

We predict the market will continue to trade stably going into next week. In the short term, fuel prices are being supported by strong seasonal demand and persistent geopolitical uncertainty. While there are signs of longer-term easing, with increased supply and reduced demand forecasts, they may take time to filter through. 

Fuel prices this week:

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

Fuel prices dipped early in the week due to easing tensions in the Middle East, but rising global risks and market uncertainty mean that prices may change. Here is a summary of what’s been going on this week, as well as the impact for drivers. 

Ceasefire calms supply jitters (temporarily)

Oil prices dropped at the start of the week as tensions between Iran and Israel eased with a temporary ceasefire. This reduced fears of a major supply disruption in the Middle East – one of the world’s key oil-producing regions. Lower geopolitical risk often means lower wholesale prices, which can translate to cheaper fuel. 

Shockwaves from Pax liquidation

Markets were caught off guard when Prax, the company that owns the Lindsey refinery in Lincolnshire, went into liquidation. Prax also owns a North Sea oil field and a wide network of UK petrol stations. The uncertainty surrounding future fuel supply from these operations has traders nervous – and nervous markets usually lead to higher prices.

Rising Middle East tensions and nuclear concerns

The situation turned again when Iran stopped cooperation with the UN’s nuclear watchdog following strikes by the U.S. and Israel. This raises new fears about regional instability and global energy supply. That kind of risk drives up oil prices globally, which could hit UK pumps.

New US Policies

A new U.S. tax bill passed on Thursday locks in previous tax cuts and expands oil and gas lease sales across the country. While this could increase future oil production, markets often respond more to short-term uncertainty than long-term gains, so prices are still uncertain. 

Supply and demand 

Mixed supply signals from U.S. markets

Confusing inventory data in the U.S. is adding to the uncertainty. If traders can’t clearly tell how much oil is in storage, they can’t predict future supply accurately, so they price in the risk, pushing costs higher. Meanwhile, U.S. Federal Reserve Chair Jerome Powell blamed past tariffs for holding back interest rate cuts, which adds another layer of economic unpredictability.

Russian refinery maintenance 

Russian refineries are undergoing maintenance, tightening global fuel supply. Even though their products don’t go to Europe directly, less output globally still means more competition for supply, pushing prices up everywhere, including the UK.

OPEC’s Big Decision

Looking ahead, all eyes are on OPEC’s meeting on 6th July. If they agree to increase production in August, it could help stabilise markets and ease upward pressure on prices. 

Looking Ahead – oil and fuel prices next week

We predict the market will trade higher going into next week. Fuel prices at the pump often follow wholesale oil prices. As markets react to geopolitical tensions, refinery disruptions, and policy shifts, the cost of petrol and diesel fluctuates. While prices dropped earlier this week, rising global uncertainty suggests they may rise again soon.

Fuel prices this week:

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

Despite high expectations that oil prices would rise dramatically this week, they actually saw the steepest drop since March 2023. 

Middle East tensions 

Despite the U.S. bombing Iranian nuclear facilities and Iran’s retaliatory missile strikes on U.S. bases in Doha, the market reacted with caution rather than panic. Oil prices remained mixed at the start of the week but ultimately trended lower as concerns about escalation subsided. 

The Strait of Hormuz

One key concern was Iran’s threat to block the Strait of Hormuz, a critical route for about 20% of global oil shipments. However, the waterway remains open, and President Trump’s outreach to China for diplomatic support may have helped to stablise the situation. China is heavily reliant on oil that moves through the Strait, and has actually increased its imports from Iran to record highs during June. The continued flow of oil through the Strait of Hormuz means that there is no significant disruption affecting global supply, which helps keep oil and fuel prices from rising.

Ceasefire sees risk of oil supply disruption drop

The ceasefire between Iran and Israel, although briefly broken, has held for several days. U.S. mediation helped bring both sides back to the negotiating table, and analysts at Goldman Sachs estimate that the current risk of oil supply disruption in the region has dropped to just 4%. 

Oil supply and demand

On the supply side, U.S. oil inventories showed strong draws. Meanwhile, OPEC+ is expected to raise output by 411,000 barrels per day at its upcoming July 6 meeting, further easing supply concerns. If supply rises faster than demand, oil becomes less scarce, and prices — including fuel prices — tend to fall. The current situation suggests that increased supply is offsetting demand pressure, which is why fuel prices are likely to stay low or even drop further.

Looking Ahead – oil prices next week

We expect oil prices to remain lower going into next week, provided current trends continue, with no significant new threats and steady supply.

Unless global demand spikes or supply unexpectedly tightens, prices at the pump are not expected to rise.

Fuel prices this week:

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

Crude oil prices went up for the third week in a row, mainly due to growing conflict in the Middle East. Brent crude oil prices hit a peak on June 19 before dipping slightly. These rising oil prices can eventually trickle down to higher fuel prices at the pump, especially if the trend continues.

Oil prices climb as Middle East tensions rise

Tensions between Israel and Iran flared up after Israeli airstrikes on June 13, leading to missile exchanges between the two countries. Several of these attacks targeted energy sites, raising fears about potential damage to oil facilities. While no major supply disruptions have happened yet, there’s concern about the Strait of Hormuz – a narrow waterway that handles about one-third of all oil shipped by sea. If anything were to block or slow traffic through that area, it could quickly lead to supply issues, which would drive up fuel prices around the world. 

President Trump has called for Iran’s unconditional surrender and says the U.S. may join the strikes. The White House has given itself two weeks to make that decision, depending on whether peace talks go anywhere. Meanwhile, leaders in the UK and EU are urging all sides to find a diplomatic solution. If the situation worsens, oil prices – and fuel prices – could rise even more. Any progress toward peace might help ease prices.

Supply remains stable – for now

Despite all this, groups like the International Energy Agency and OPEC say there’s no immediate oil shortage. In fact, global supply is still solid. But the fear of possible disruptions, especially at the Strait of Hormuz. is enough to keep prices on edge. Even if there’s plenty of oil available, fear and uncertainty can still push prices higher – something drivers might start noticing at the pump in the coming weeks.

Looking Ahead – oil prices next week

Looking ahead, we expect oil prices to keep climbing in the short term. The outlook remains unpredictable. A serious escalation in the Middle East could mean more expensive fuel, while a quick diplomatic breakthrough could bring some relief. Either way, the situation is one to watch if you’re keeping an eye on fuel prices.

Fuel prices this week:

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

Oil prices increased this week due to geopolitical risks, disrupted production, and shifting global supply dynamics. These developments have a direct impact on fuel prices at the pump, as crude oil is the largest cost component in gasoline and diesel pricing.

Middle East escalation

Israel launched airstrikes on Iran today (Friday 13th), targeting nuclear sites and missile factories, and killing key military leaders. Although energy infrastructure was not hit, Iran has vowed to retaliate, raising fears of escalation. This could affect the Strait of Hormuz—a vital shipping route which is used to transport nearly 25% of the world’s oil. Any threat or closure here would restrict global supply, lead to higher costs for refiners and increase fuel prices for consumers. 

Oil supply concerns

Canadian wildfires

Ongoing wildfires in Alberta, a major oil-producing region, have continued to disrupt oil production. This has resulted in fears of short-term supply shortages, especially for North American refiners. When the supply is constrained, the cost of oil increases. This often results in an increase in pressure on fuel prices at the pump.

OPEC+ and strategic reserves

OPEC+ is gradually easing its cuts, adding back nearly half a million barrels per day each month, with similar increases earmarked for July. However, with some uncertainty around supply contains and geopolitical risks, the IE announced that it may release up to 1.2 billion barrels from strategic reserves. This has been criticised by OPEC, which warned the move could create unnecessary panic. If producers and governments send mixed signals, market volatility may rise. Uncertainty often leads to speculative price increases, which are passed on to consumers via higher fuel prices.

Trade Talks and Tensions 

Investor sentiment improved as US-China trade negotiations made progress. Both countries agreed on a framework to resume cooperation and reduce export restrictions on rare earth elements. This has boosted global economic confidence. A stronger global economy generally increases energy demand. As demand rises faster than supply, crude oil prices – and consequently fuel prices – can increase.

Looking Ahead – oil prices next week

Despite OPEC’s assurances of sufficient supply, geopolitical tensions and supply disruptions are driving uncertainty. If conflict escalates or Iranian energy infrastructure is targeted, oil prices could rise further. We expect oil to trade sharply higher next week, which could translate into higher fuel costs at the pump globally.