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 prices this week: 

With prices higher this week than last, we explore the factors influencing recent price fluctuations: 

Middle East Tensions 

At the start of the week, oil prices were slightly lower, but concerns about potential conflicts in the Middle East heightened midweek. A dramatic escalation in hostilities between Iran and Israel further added to worries on Tuesday, when Iran launched a ballistic missile attack on Israel. 

Markets reacted with a sharp 3% rise in oil prices due to fears of further escalation. Investors are now concerned about Israel’s potential retaliation, especially targeting Iranian oil infrastructure. In an off-the-cuff statement, US President Joe Biden said that his administration has been “discussing” possible Israeli plans to attack Iran’s oil industry – triggering a further spike in oil prices. As the world’s 7th largest oil producer, any disruption to Iran’s oil supply is a significant concern for global fuel costs. 

OPEC production 

OPEC’s recent decision to halt its gradual increase in oil production has added another layer of uncertainty to the market. By constraining supply, OPEC is driving up prices amid growing global demand. Financial institutions had already anticipated a shift to $60 per barrel in the coming months, even before the latest geopolitical developments. This OPEC policy signals that supply could worsen if the geopolitical crisis leads to further disruptions.

5% rise in oil prices 

Prices have spiked by 5% since the beginning of the week – showing that the oil market is highly reactive to any news concerning potential supply chain disruptions. 

Next week’s fuel prices

We predict the market will trade higher next week. 

Overall, the combination of geopolitical risk, OPEC’s production constraints, and market anxiety is expected to keep fuel prices rising as the week progresses. 

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. 

Ready to find out how a fuel card can save you money? Speak to our team or explore our range of fuel cards here. 

The information provided in this post is for information only. It does not constitute financial advice. Pricing predictions are speculative and should not be relied upon for forecasting purposes. 

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 impacting fuel prices this week

Oil prices went up by about 2% on Tuesday, reaching their highest level in three weeks. This increase was driven by China’s announcement of a major financial boost to its economy and worries that the growing conflict in the Middle East might disrupt oil supplies from the region.

Despite this initial rise, prices dropped slightly after it became clear that a hurricane expected to hit the major US oil-producing region was instead heading for Florida. Some offshore producers had evacuated platforms or closed rigs early in the week, as a precautionary measure. Some firms, including Shell, restored production as the storm forecasts shifted away from their offshore platforms.

News reports also showed a sharp drop in U.S. consumer confidence, the biggest in three years. U.S. consumer confidence is a strong indicator of future economic activity and demand for goods and services. A significant drop in consumer confidence can directly and indirectly reduce fuel demand, applying downward pressure on oil prices.

Crude oil inventories in the United States fell by 4.339 million barrels for the week ending September 20, with further drops expected – the fifth decline in six weeks. This decline in stored oil supplies has also influenced market dynamics.

Rising tensions in the Middle East, including an Israeli airstrike in Beirut, have shifted market sentiment away from the recent pessimism about oil prices. Concerns are also growing that the conflict could pull Iran, a key oil producer and OPEC member, into a conflict with Israel.

Meanwhile, a pending resolution to Libya’s central bank crisis looks set to restore significant oil supply. Delegates from Libya’s east and west have agreed on the steps and timeline for appointing leaders of the central bank, according to the United Nations. This deal could ease tensions over who controls the central bank and oil revenues, which have been causing a sharp drop in Libya’s oil production and exports in recent weeks. 

Oil prices fell by 3% on Thursday after a Financial Times report revealed that Saudi Arabia plans to abandon its unofficial goal of reaching $100 per barrel for crude. The report indicated that Saudi Arabia, along with OPEC and its allies, is preparing to increase oil output in December. Experts note that the planned production increase, adding about 180,000 barrels per day, could loosen the global oil supply balance, with speculation that Saudi Arabia might be entering a price war with other oil producers. This has caused uncertainty in the oil markets, which were already concerned about future oil supply and demand balances in 2025. Investor sentiment is low, reflecting worries about the potential instability in global oil markets.

Meanwhile, OPEC has raised its medium and long-term oil demand forecasts, citing growth in countries like India, Africa, and the Middle East and a slower shift to electric vehicles and cleaner fuels.

Next week’s fuel prices

We predict the market will be more stable going 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. 

Ready to find out how a fuel card can save you money? Speak to our team or explore our range of fuel cards here. 

The information provided in this post is for information only. It does not constitute financial advice. Pricing predictions are speculative and should not be relied upon for forecasting purposes. 

News hit last week that fuel prices were at their lowest since October 2021. Over the last week, a US interest rate cut, Middle East tensions, declining global stockpiles and weak demand from China have all influenced the cost of crude oil and fuel pump prices.

Robin, Revenue and Retention 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 impacting fuel prices this week

The market has settled stable in comparison to last week.

On Monday, oil prices dipped slightly as traders reacted to Friday’s late losses. U.S. traders had sold off covering positions after news that refineries had sustained no serious damage from Storm Francine. However, a statement from the U.S. offshore energy regulator on Sunday reported that nearly a fifth of crude oil production output in U.S. Gulf of Mexico federal waters remained offline. While refineries were reported undamaged, these production outages are keeping supply tight, supporting prices.

On Tuesday morning, Oil prices remained relatively unchanged. However, by the afternoon, prices began to rise in anticipation of a possible 0.5% cut in US interest rates. As expected, Oil prices posted modest gains of more than 1% on Thursday, following a confirmed cut in U.S. interest rates.

Crude inventories in the U.S., the world’s top producer, fell to a one-year low last week, government data showed on Wednesday. Exports are expected to rebound in the coming week following disruptions from Storm Francine.

Declining global stockpiles have helped offset some of the demand concerns arising from weak consumption in China. However, China’s slowing economy continues to limit oil’s gains. The latest Chinese refinery output data was weaker than expected, falling to a 22-month low of 13.91m bpd. The most recent new car sales data from China shows that sales of “new energy vehicles” were higher than sales of ICE vehicles for a second month. As electric vehicle sales surge, driven largely by China, the impact on oil consumption will likely become even more pronounced.

Traders are also following developments in the Middle East, after thousands of pagers and radio devices exploded in two separate incidents in Lebanon – injuring thousands of people and killing at least 37.

Next week’s fuel prices

We predict the market will be more stable going 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. 

Ready to find out how a fuel card can save you money? Speak to our team or explore our range of fuel cards here. 

The information provided in this post is for information only. It does not constitute financial advice. Pricing predictions are speculative and should not be relied upon for forecasting purposes. 

News hit this week that fuel prices are at their lowest since October 2021. Reduced wholesale fuel costs have been attributed to a lower oil price, together with a favourable Sterling to US dollar exchange rate.

With speculation around the fuel duty cut still looming large on the horizon, Robin, Revenue and Retention Manager at The Fuel Store, shares his insights into the factors that are 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 impacting fuel prices this week

A number of factors are causing the market to trade lower this week, in comparison to this time last week. 

• On Monday, prices rebounded in a corrective rise after last week’s losses, which intensified on Friday after the release of US payroll data. 
• However, on Tuesday afternoon prices fell sharply when OPEC (Organisation of the Petroleum Exporting Countries) downgraded global demand growth forecasts for 2024. In its monthly oil report, the group revised demand growth to 2.03 million barrels per day from the previous forecast of 2.11 million barrels per day.
• On Thursday, prices were also impacted by Tropical Storm Francine, which tore through off-shore oil-producing areas in the Gulf of Mexico. Around 40% of US crude oil production was hit, totaling 675,000 bpd, and reducing operations at six refineries. 
• Crude exports have been hit by unrest in Libya, with oil exports falling around 81%, according to Kpler data, as the National Oil Corporation cancelled cargoes amid a crisis over control of Libya’s central bank and oil revenue.
• Demand expectations remain dismal as both OPEC and the International Energy Agency this week lowered their demand growth forecasts, citing economic struggles in China, the world’s largest oil Importer.
• The recent run of weaker Chinese economic data suggests that oil demand in the world’s second-largest economy may remain subdued for longer, while demand has been soft in other countries outside of China as well.
• Oil prices are likely to keep falling, the head of the International Energy Agency has said, as producers continue to pump volumes that exceed global demand. 

Next week’s fuel prices

We predict the market will trade lower going into next week, resulting in lower prices at the pump. 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. 

Ready to find out how a fuel card can save you money? Speak to our team or explore our range of fuel cards here.