Robin, Customer Success Manager at The Fuel Store, shares his insights into the factors impacting fuel prices, including his predictions for fuel costs as we head into next week.

What determines fuel prices?

Wholesale fuel prices govern the price you pay for petrol and diesel at the pumps. Wholesale prices are influenced by a range of factors, including supply, demand, and pricing for crude oil, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government.

Factors influencing fuel pricing this week

Oil prices have risen compared to this time last week, buoyed by continuing weather-driven demand and geopolitical developments.

Geopolitical influences on oil prices

Oil prices started the week lower as traders took profits from recent price increases. However, as the week progressed, prices rose slightly due to tighter supplies from Russia and OPEC (the Organisation of Petroleum Exporting Countries). On Friday, oil prices surged as traders focused on possible disruptions in supply due to more sanctions against Russia and Iran.

US Sanctions

In the US, the outgoing Biden administration plans to impose more sanctions on Russia’s oil exports ahead of Donald Trump’s inauguration on 20 January, at which point Trump is expected to reinforce restrictions on Iran’s oil exports – potentially causing a supply disruption of around 1% of global supply.

Global economic activity

New U.S. data showed an unexpected increase in job openings, pointing to stronger economic activity. As a major oil consumer, improvements in economic activity in the US set expectations for a boost in demand for oil. Over the last month, business activities also accelerated more than expected in major European economies, including Spain, Italy, France, and Germany, which is also expected to boost demand.

Traders are also closely watching China’s stimulus plans, which could drive more demand for oil. Supplies remain tight after the holiday season, adding pressure to prices.

Supply, demand and other factors

• While geopolitical tensions can cause market uncertainty – especially in oil-producing regions such as the Middle East and Russia – global economic performance can slow demand and impact prices. 
• Oil is traded in U.S. dollars, so fluctuations in the dollar’s value impact oil prices. A stronger dollar makes oil more expensive for other currencies, potentially lowering demand. 
• Seasonal factors like winter heating demand in the Northern Hemisphere can also increase oil consumption and pricing. 

Next week’s fuel prices

We expect fuel prices to rise next week, due to forecasts of unusually cold temperatures in Europe and the U.S, which drive up the demand for fuel. In addition, last-minute sanctions against Russia from the Biden administration could reduce supplies further, pushing prices higher. With these factors in play, prices are likely to stay volatile.

Robin, Customer Success Manager at The Fuel Store, shares his insights into the factors impacting fuel prices, including his predictions for fuel costs as we head into next week.

What determines fuel prices?

Wholesale fuel prices govern the price you pay for petrol and diesel at the pumps. Wholesale prices are influenced by a range of factors, including supply, demand, and pricing for crude oil, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government.

Factors influencing fuel pricing this week

The market has been trading higher compared to this time last week, buoyed by a combination of weather-driven demand and geopolitical developments.

Weather and energy dynamics

At the start of the week, prices were bolstered by forecasts of extremely cold weather expected to persist over the next three weeks. This sharp drop in temperatures across Europe coincided with a significant shift in energy dynamics: an end to Russian gas supplies via Ukraine. This development marks the end of a five-decade-long partnership where Russian gas was transported through Ukraine to European customers. The reduced supply options have strained Europe’s energy market, resulting in elevated prices.

Chinese economic stimulus

On the first trading day of 2025, investors returned with renewed confidence following Chinese President Xi Jinping’s New Year’s address. Xi pledged to adopt more proactive measures to stimulate growth in 2025, reinforcing expectations of increased fuel demand from the world’s second-largest economy. 

Oil Market Dynamics

Oil prices experienced dropped slightly after surging earlier in the week. Expectations of tightening supplies and robust demand recovery in key economies like China and India look set to boost prices. 

Supply, demand and other factors

• While geopolitical tensions can cause market uncertainty – especially in oil-producing regions such as the Middle East and Russia – global economic performance can also slow demand and impact prices. 
• Oil is traded in U.S. dollars, so fluctuations in the dollar’s value impact oil prices. A stronger dollar makes oil more expensive for other currencies, potentially lowering demand. 
• Seasonal factors like winter heating demand in the Northern Hemisphere can also increase oil consumption and pricing. 

Next week’s fuel prices

Looking ahead, we anticipate a mixed trajectory as we head into next week. Prices are likely to trade lower initially as the recent weather-driven surge and speculative activity correct. However, as the week progresses, renewed confidence in global economic growth and ongoing supply-side challenges are expected to drive prices higher once again.

Robin, Customer Success Manager at The Fuel Store, shares his insights into the factors impacting fuel prices, including his predictions for fuel costs as we head into next week.

What determines fuel prices?

Wholesale fuel prices govern the price you pay for petrol and diesel at the pumps. Wholesale prices are influenced by a range of factors, including supply, demand, and pricing for crude oil, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government.

Factors influencing fuel pricing this week

The market is trading stably, with prices down compared to this time last week.

At the start of the week, prices dipped slightly following weaker-than-expected US inflation data.  US core inflation fell to 0.1% in November compared to expectations of 0.3% and 0.3% the previous month.

During the week oil prices demonstrated a gradual rise, influenced by multiple market factors. 

Brent crude prices closed at $74.17 per barrel on December 27, reflecting a 1.2% daily increase and a weekly gain of approximately 1.4%. This price increase reflects growing optimism about a recovery in global demand, particularly from China, as the government continues rolling out economic support measures. Recently announced measures include the approval of a $3 trillion treasury bond for 2025, following previous monetary-support packages and structural reform initiatives aimed at boosting economic growth.

The momentum was supported by a larger-than-expected draw in U.S. crude oil inventories, with a 4.2 million barrel reduction reported by the Energy Information Administration. This exceeded analysts’ expectations and highlighted heightened refinery activity and increased holiday season fuel demand.​

Supply, demand and other factors

• While geopolitical tensions can cause market uncertainty – especially in oil-producing regions such as the Middle East and Russia – global economic performance can also slow demand and impact prices. 
• Oil is traded in U.S. dollars, so fluctuations in the dollar’s value impact oil prices. A stronger dollar makes oil more expensive for other currencies, potentially lowering demand. 
• Seasonal factors like winter heating demand in the Northern Hemisphere can also increase oil consumption and pricing. 

Next week’s fuel prices

Looking ahead, we anticipate the market will trend slightly higher heading into next week. Concerns about potential oversupply in 2025, stemming from increased global production and the potential slowing of China’s demand, remained in focus. 

Robin, Customer Success Manager at The Fuel Store, shares his insights into the factors impacting fuel prices, including his predictions for fuel costs as we head into next week.

What determines fuel prices?

Wholesale fuel prices govern the price you pay for petrol and diesel at the pumps. Wholesale prices are influenced by a range of factors, including supply, demand, and pricing for crude oil, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government.

Factors influencing fuel pricing this week

The market is trading higher compared to the same time last week.

At the start of the week, oil prices saw significant gains, marking their first weekly rise since late November. This upward movement was driven by heightened supply concerns following additional sanctions on Iran and Russia.

Meanwhile, a surplus outlook exerted downward pressure on markets. This concern that global production and supply of oil will outpace the consumption or demand for it, can result in downward pressure on prices, as an oversupplied market typically leads to lower prices unless offset by other factors, such as geopolitical risks or increased consumption forecasts.

Optimism surrounding Chinese stimulus measures, aimed at boosting demand in the world’s second-largest oil consumer, also provided support to prices.
As the week progressed, prices dipped slightly due to signs of weakness in consumer spending in China. Slower-than-expected retail sales have maintained pressure on Beijing to enhance stimulus efforts in an economy which is being impacted by U.S. trade tariffs under the Trump administration. Investors also remained cautious ahead of the U.S. Federal Reserve’s interest rate decision.

Following the Federal Reserve’s policy announcement and press conference following its December 2024 meeting, the Federal Reserve cut interest rates by 0.25%, resulting in prices falling further.

Supply, demand and other factors

• While geopolitical tensions can cause market uncertainty – especially in oil-producing regions such as the Middle East and Russia – global economic performance can also slow demand and impact prices. 
• Oil is traded in U.S. dollars, so fluctuations in the dollar’s value impact oil prices. A stronger dollar makes oil more expensive for other currencies, potentially lowering demand. 
• Seasonal factors like winter heating demand in the Northern Hemisphere can also increase oil consumption and pricing. 

Next week’s fuel prices

Looking ahead, we expect the market to trade slightly lower into next week.

Prices this morning have declined amidst concerns about demand growth in 2025, particularly from China, the world’s largest crude importer. The dollar’s climb to a two-year high has added pressure on oil prices, after the Federal Reserve flagged it would be cautious about cutting interest rates in 2025. A stronger dollar increases the cost of oil for non-dollar buyers, while a slower pace of rate cuts could temper economic growth and reduce oil demand.

Robin, Customer Success Manager at The Fuel Store, shares his insights into the factors impacting fuel prices, including his predictions for fuel costs as we head into next week.

What determines fuel prices?

Wholesale fuel prices govern the price you pay for petrol and diesel at the pumps. Wholesale prices are influenced by a range of factors, including supply, demand, and pricing for crude oil, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government.

Factors influencing fuel pricing this week

This week, fuel prices have remained relatively stable overall, with a slight drop. Here’s what has been influencing the market:

OPEC+ Production Cuts

At the start of the week, oil prices dipped. This came after OPEC+ announced an extension of their production cuts until March 31, 2025. By restricting how much oil is available, these cuts are meant to keep prices steady. However, the decision also reflects concern about weak global demand, as the market isn’t consuming as much oil as expected.

Rising Middle East Tensions

Later in the week, oil prices climbed following reports that the Assad regime in Syria had been ousted by rebel forces. This has reignited fears of instability in the Middle East, a region critical to global oil supply. Any potential disruptions in production or transport in this area can drive up prices.

China’s Economic Measures

As the week went on, prices continued to rise due to optimism about growing oil demand in China, the world’s largest importer of crude oil. Beijing announced it would ease monetary policies to encourage economic growth, which could lead to higher industrial and transport activity—and therefore greater oil consumption. Stronger policy signals from Chinese authorities have also fueled hopes for further stimulus measures in 2025, supporting market confidence.

Supply, demand and other factors

• While geopolitical tensions can cause market uncertainty – especially in oil-producing regions such as the Middle East and Russia – global economic performance can also slow demand and impact prices. 
• Oil is traded in U.S. dollars, so fluctuations in the dollar’s value impact oil prices. A stronger dollar makes oil more expensive for other currencies, potentially lowering demand. 
• Seasonal factors like winter heating demand in the Northern Hemisphere can also increase oil consumption and pricing. 

Next week’s fuel prices

Looking ahead, we expect the market to trend higher. Continued optimism about China’s demand, coupled with ongoing concerns about supply disruptions and geopolitical risks, will likely support price increases.

Robin, Customer Success Manager at The Fuel Store, shares his insights into the factors impacting fuel prices, including his predictions for fuel costs as we head into next week.

What determines fuel prices?

Wholesale fuel prices govern the price you pay for petrol and diesel at the pumps. Wholesale prices are influenced by a range of factors, including supply, demand, and pricing for crude oil, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government.

Factors influencing fuel pricing this week

The oil market is trading slightly lower this week, compared to last week. At the start of the week, oil prices remained steady. This was due to a mix of factors: optimism about stronger demand from China’s improved factory activity was balanced by concerns that the U.S. Federal Reserve might hold off on cutting interest rates in its upcoming December meeting.

The Chinese Economy

China’s factory activity grew at the fastest rate in five months this November, driven by a strong increase in new orders, including international demand. This growth boosted production levels and raised manufacturers’ confidence to an eight-month high, according to a private-sector survey released on Monday.
Increased factory activity in China signals stronger economic growth and higher industrial output. As one of the world’s largest oil consumers, China plays a critical role in shaping global oil demand. Weak economic growth in China can limit industrial activity, transportation, and manufacturing—all key drivers of oil consumption – while a strong recovery in China could boost global oil demand. Additionally, the optimism among manufacturers suggests sustained or growing demand, which can further support fuel prices as traders anticipate a steady or rising need for energy in the future.

Federal Reserve eyes interest rate cuts

However, this optimism is tempered by news that the Atlanta Federal Reserve President, Raphael Bostic, has an open mind about cutting interest rates again at its December meeting, with data on jobs important in shaping the decision. Higher interest rates increase the cost of borrowing, which can slow economic activity and dampen demand for oil.

Ongoing geopolitical tension

Geopolitical uncertainties also continue to influence oil prices. Although a ceasefire between Israel and Hezbollah began last Wednesday, it remains fragile, and doubts about its stability have emerged. Meanwhile, heightened tensions in the Middle East, including a new rebel offensive in Syria that risks involving multiple oil-producing nations, continue to support oil prices. South Korea’s political unrest also adds to the global risk environment.

OPEC+ – supply and demand

Oil prices fell on Thursday and Friday as investors weighed a supply surplus forecast for 2025. Despite OPEC+’s decision to delay planned output increases until April 2025 and extend deep production cuts through the end of 2026, analysts still expect an oversupply. With the OPEC+ decision now settled, the market remains concerned about weak demand and increasing production from non-OPEC+ countries, which continues to pressure oil prices.

Supply, demand and other factors: 

• While geopolitical tensions can cause market uncertainty – especially in oil-producing regions such as the Middle East and Russia – global economic performance can also slow demand and impact prices. 
• Oil is traded in U.S. dollars, so fluctuations in the dollar’s value impact oil prices. A stronger dollar makes oil more expensive for other currencies, potentially lowering demand. 
• Seasonal factors like winter heating demand in the Northern Hemisphere can also increase oil consumption and pricing. 

Next week’s fuel prices

We predict the market will likely trade lower going into next week. With the OPEC+ decision out of the way, the market is still left with a sluggish demand outlook and rising non-OPEC+ production, along with uncertainty around geopolitical and global economic influences.

Robin, Customer Success Manager at The Fuel Store, shares his insights into the factors impacting fuel prices, including his predictions for fuel costs as we head into next week.

What determines fuel prices?

Wholesale fuel prices govern the price you pay for petrol and diesel at the pumps. Wholesale prices are influenced by a range of factors, including supply, demand, and pricing for crude oil, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government.

Factors influencing fuel pricing this week

Oil prices are slightly lower in comparison to last week. 

Geopolitical tensions and the impact on fuel prices: 

Prices started the week higher due to renewed concerns about the Ukraine conflict, as tensions escalated in the region. 

Tensions in Eastern Europe continue to unsettle markets, especially given Russia’s role  as a major oil exporter. Any escalation could disrupt energy supplies and increase prices.

However, midweek developments saw a slight reduction in prices. Israel and Hezbollah agreed to a 60-day ceasefire that began at 4 a.m. local time today. This truce follows significant damage inflicted by Israel on the Iranian-backed Hezbollah militia. While the ceasefire initially reduced geopolitical risks, oil prices rose slightly after reports of a potential violation of the truce. Israeli military tanks fired into southern Lebanon, claiming that suspicious vehicles and individuals had entered the border zone. 

Ceasefires in volatile regions temporarily ease concerns, but violations or renewed fighting can quickly reverse market sentiment.

OPEC+ Meeting Postponement and Its Impact:

Another key factor influencing the market is the upcoming OPEC+ meeting, originally scheduled for December 1 but postponed to December 5. 

Russia, Saudi Arabia, and other OPEC+ members have been holding discussions over potential changes to oil production. There is speculation that OPEC+ might announce deeper production cuts or extend existing ones to stabilise prices. Any decision to limit supply further would likely push prices higher in the coming weeks. 

Supply, demand and other factors: 

• While geopolitical tensions can cause market uncertainty – especially in oil-producing regions such as the Middle East and Russia – global economic performance can also slow demand and impact prices. 
• Oil is traded in U.S. dollars, so fluctuations in the dollar’s value impact oil prices. A stronger dollar makes oil more expensive for other currencies, potentially lowering demand. 
• Seasonal factors like winter heating demand in the Northern Hemisphere can also increase oil consumption and pricing. 

Next week’s fuel prices

We predict that fuel prices will rise slightly next week, as markets prepare for the OPEC+ meeting and react to uncertainties surrounding the Israel-Hezbollah ceasefire. The combination of potential production cuts, seasonal demand increases, and geopolitical factors could create upward pressure on prices.

Robin, Customer Success Manager at The Fuel Store, shares his insights into the factors impacting fuel prices, including his predictions for fuel costs as we head into next week.

What determines fuel prices?

Wholesale fuel prices govern the price you pay for petrol and diesel at the pumps. Wholesale prices are influenced by a range of factors, including supply, demand, and pricing for crude oil, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government.

Factors influencing fuel pricing this week

Fuel prices are currently higher than this time last week.

At the start of the week, oil prices were relatively steady. However, as the week went on, prices began to rise due to escalating tensions between Russia and Ukraine. 

On Tuesday, Ukraine used ATACMS missiles supplied by the US to strike Russian territory for the first time. Russia described this as a serious escalation by the West, with Russian President Vladimir Putin warning that the threshold for a possible nuclear strike had been lowered. 

By midweek, oil prices had climbed nearly 2% as the conflict intensified. Both countries launched missile attacks, raising concerns about potential disruptions to global oil supplies if the situation worsens. On Thursday, Putin announced that Russia had launched a hypersonic missile at a Ukrainian military target and issued a stark warning to the West. He threatened to target military installations in any country supplying weapons to Ukraine.

As the world’s second-largest oil exporter after Saudi Arabia, Russia plays a critical role in the global oil market, and any major supply disruptions could have significant impacts. These developments have shifted the market’s attention to the heightened risk of a broader escalation in the war, which could further strain global oil supplies. As a result, oil prices are expected to remain under upward pressure into next week.

While geopolitical tensions are pushing prices up, data from the American Petroleum Institute (API) and Energy Information Agency (EIA) showed higher-than-expected inventories, indicating that supply currently outpaces demand. However, this surplus has not calmed the market, due to speculation about further supply disruptions. Speculation is also mounting that OPEC+ may delay planned output increases when it meets on Dec. 1, adding further uncertainty to the market.

Next week’s fuel prices

We predict that fuel prices will rise next week, driven by the escalating war in Ukraine and concerns about potential disruptions to Russia’s energy infrastructure. The market’s attention will likely remain on OPEC+ deliberations and the unfolding geopolitical crisis. Any significant developments in these areas could amplify price volatility.

Robin, Customer Success Manager at The Fuel Store, shares his insights into the factors impacting fuel prices, including his predictions for fuel costs as we head into next week.

What determines fuel prices?

The price you pay for petrol and diesel at the pumps is governed by wholesale fuel prices. Wholesale prices are influenced by a range of factors, including supply, demand and pricing for crude oil, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government.

Factors influencing fuel pricing this week

Fuel prices have increased slightly compared to this time last week, due to a mix of political, economic, and market-driven factors.

Impact of the Trump Administration

At the beginning of the week, oil prices dipped following the announcement of policies by Trump’s new administration. Wall Street figures have described the administration as “unstable with a lot of noise,” with concerns that unpredictability may lead to market volatility. This volatility arises as traders respond to policy changes and potential geopolitical disruptions relating to the administration’s decisions.

The Trump administration has prioritised “energy dominance,” focusing on increasing domestic oil and gas production, expansion of drilling, and relaxing of regulations. These measures could lead to a boost in U.S. oil supply, which might push prices down if global demand does not rise to match the increased production. However, the administration’s actions on international relations, particularly with oil-producing nations, could have the opposite effect, creating supply uncertainties and driving prices higher.

China’s Role in Oil Markets

China, as one of the world’s largest oil consumers, plays a critical role in shaping global oil demand. Recently, China announced a $1.4 trillion economic stimulus package aimed at boosting its economy. However, many experts believe this effort may fall short of significantly increasing oil demand. Weak economic growth in China can limit industrial activity, transportation, and manufacturing—all key drivers of oil consumption.

China’s stimulus plan is important for oil markets because it sends a signal about the country’s economic trajectory. A strong recovery in China could boost global oil demand, while a sluggish response could dampen it. Markets are closely watching whether this stimulus will revive economic activity enough to lift oil consumption.

Current Market Trends

By the end of the week, oil prices experienced a modest rise. One key factor was the release of the American Petroleum Institute (API) report, which revealed a decline in U.S. crude oil stock by 770,000 barrels. Lower inventories often signal tighter supply, which can support higher prices. Traders are also anticipating the Department of Energy (DOE) report, expected to show an even larger drop in U.S. crude supply. A sharper-than-expected decline would reinforce concerns about supply shortages and could push prices further upward.

Middle East tensions

Global oil prices are also being influenced by geopolitical concerns. Recent tensions in the Middle East have raised fears about potential disruptions to oil production and supply routes, which could further strain global oil availability.

Next week’s fuel prices

Given these developments, we expect oil and fuel prices to continue their upward trend heading into next week.

In summary, while fuel prices have risen slightly this week, the market remains highly sensitive to political actions, economic policies, and supply dynamics.

Robin, Customer Success Manager at The Fuel Store, shares his insights into the factors impacting fuel prices, including his predictions for fuel costs as we head into next week.

The price you pay for petrol and diesel at the pumps is governed by wholesale fuel prices. Wholesale prices are influenced by a range of factors, including supply, demand and pricing for crude oil, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government.

Factors influencing fuel pricing this week

Prices per litre have risen slightly compared to the same time last week.

OPEC+ increase delayed

On Sunday, OPEC+ announced that it would extend its output cut of 2.2 million barrels per day (bpd) until January 2025. The increase was already delayed from October because of falling prices and weak demand.

A quick reminder of why this is important: The Organisation of the Petroleum Exporting Countries (OPEC) manages oil production in its member countries by setting production targets. With member countries responsible for about 40% of the world’s crude oil (and 60% of petroleum traded globally), crude oil prices trend to increas when OPEC production targets are reduced.

Middle East Tensions

Oil prices were further impacted by reports that Israeli intelligence suggested Iran is preparing to attack Israel from Iraqi territory.

If a full-scale war were to break out between Israel and Iran, the impact on global energy supplies and the transportation of oil through the Strait of Hormuz could be severe, resulting in significant increases in oil prices and potentially damaging the global economy.

The US Election

Trump’s recent election win has strengthened the U.S. dollar relative to the pound, which is adding resulting in increased oil prices in the UK. Energy markets are speculating about what Trump’s presidency means for oil and gas prices – with expectations about his policies on trade, energy production, and foreign relations adding layers of uncertainty and speculation, creating upward pressure on global oil prices.

The latest DOE reports have been released showing a larger than expected demand decrease of 1.899 million barrels per day in the US. This has caused the rise in the market to slow.

Next week’s fuel prices

With no additional supply from OPEC expected soon and a heightened risk of conflict in the Middle East, we anticipate that the market will continue to rise through the remainder of this week and likely into next week.

Businesses and drivers can reduce costs further by opting for a fuel card. In 2023, customers of The Fuel Store saved an average of 12 ppl off forecourt costs.