We share our insights into the factors impacting fuel prices, including 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

Russian supplies

Ukraine has intensified its attacks on Russian energy infrastructure in recent weeks. This week, the Lukoil refinery, the biggest refinery in southern Russia, was attacked by Ukrainian drones. Crude oil deliveries to the refinery have been halted, with supplies being sent from inventory.

Russia’s oil industry is under strain, with overall refining volumes dropping to their lowest levels since 2012. Geopolitical instability, especially in major oil-producing nations like Russia, tends to create uncertainty in global energy markets. This often drives oil prices higher as traders factor in potential future disruptions.

US politics and sanctions 

There’s plenty of uncertainty in global crude flows – especially with fresh U.S. sanctions putting Russian and Iranian exports at risk. Sanctions could reduce crude oil exports from major suppliers, tightening global supply. When supply shrinks, prices tend to rise.

Prices fell on Thursday after Trump repeated his plan to raise U.S. oil production, especially after the country reported a much bigger than anticipated jump in crude inventories. If the U.S. ramps up oil output – especially when inventories are high – it could lead to an oversupply in the market. More supply with steady or weakening demand typically pushes prices down. 

OPEC 

With Russian and Iranian exports at risk, buyers in Asia are turning to OPEC producers. Higher demand for OPEC oil could push prices up, especially if production capacity is already tight.

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 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 remain stable into next week. One big development to watch is India ramping up its refining game—they’re adding 1 million barrels per day of refining distillation capacity, second only to China. This could shake up global oil flows in the long run.

aWe share our insights into the factors impacting fuel prices, including 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

Trump and US policy: 

President Donald Trump has said he will follow through with his threat to hit imports from Canada and Mexico with 25% border taxes, known as tariffs, on 1 February. He also stated that a decision about whether this would include oil from those countries had not yet been made. 

Canada and Mexico are the largest crude oil suppliers to the U.S., so this decision is likely to impact supply, demand and pricing. Any U.S. sanctions on Iran or Venezuela could also tighten supply, though OPEC (see below) has spare capacity to compensate for potential losses.

The American Petroleum Institute (API) reported a 2.86 million-barrel increase in U.S. crude stockpiles, signalling weaker demand and pushing prices down.

OPEC:

Last week, President Trump urged the Organization of the Petroleum Exporting Countries (OPEC) to lower oil prices. In response, Saudi Arabia and other OPEC+ members discussed their production plans ahead of a key meeting on February 3rd. While some reports suggest OPEC will stick to its plan to increase production in April, others say it’s still uncertain. Either way, Trump’s push to boost U.S. oil production is likely to be high on the agenda. 

OPEC influences oil prices because it controls a large share of the world’s oil supply. Its members meet regularly to decide how much oil to produce, which affects global prices.

The Global Economy:

China’s manufacturing slowed in January, raising concerns that the country – the world’s largest crude oil importer – will use less oil. On top of that, new U.S. sanctions on Russian oil could disrupt Chinese refineries. Some independent refineries in China have already shut down for indefinite maintenance periods.

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 

Fuel prices next week will continue to be influenced by uncertainty around President Trump’s policies. Sluggish economic recovery in China could keep demand subdued, while geopolitical risks continue to add uncertainty.

We share our insights into the factors impacting fuel prices, including 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

Prices have fallen in comparison to this time last week, influenced by uncertainty around the new Trump administration and a slight easing of Middle East tensions. 

Trump and US policy: 

Oil prices were little changed at the start of the week with lots of attention being paid to Donald Trump’s inauguration. While campaigning, Trump pledged to impose trade tariffs on Canada and Mexico on his first day as president. The week started with an announcement that no tariffs would be imposed immediately – causing the dollar to drop. Oil is traded in U.S. dollars, so fluctuations in the dollar’s value impact oil prices. 

On Wednesday, Trump again said he planned to hit the European Union, Canada, Mexico and China with tariffs. Tariff decisions such as these are likely to impact global growth and oil demand prospects.  As attention shifts to a possible February timeline for new tariffs, it is likely that prices will continue to fluctuate. 

Prices were further impacted by announcements of plans to boost U.S. production, news that Trump wants to cut interest rates, and demands that OPEC move to lower crude prices. Changes to production, US interest rates and OPEC prices can all have an impact on supply and demand. 

At the same time, U.S. oil inventories dropped, reaching their lowest point since March 2022. More demand for oil can temporarily push prices up. But this wasn’t enough to outweigh other factors causing prices to fall this week.

Middle East Tensions:

The Middle East holds approximately 48% of the world’s proven oil reserves. Disruptions in production or export from the region, or political upheaval, can immediately affect global supply and prices​. 

Tensions involving Iran, Israel, or Yemen can threaten critical shipping routes like the Strait of Hormuz, which can impact supply and prices. Oil tankers carry approximately 17 million barrels of oil each day through the Strait, or 20 to 30 percent of the world’s total consumption. Midway through the week, a ceasefire between Isreal and Hamas (which follows 15 months of war) resulted in a rebel group scaling back their attacks on commercial vessels – easing supply concerns. While the situation remains very volatile, lower risks typically mean fewer disruptions and lower costs, which can stabilise supply chains and help bring oil prices down.

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 predict the market will continue trading lower 

Fuel prices next week will continue to be influenced by President Trump’s policies, including aims to boost U.S. production and the ongoing possibility of sanctions hitting demand. Sluggish economic recovery in China could keep demand subdued, while risks from the Russia-Ukraine conflict and the Middle East continue to add uncertainty.

Warnings of fuel price rises have hit the news this week, with drivers being told to brace themselves for higher motoring costs. With the price of petrol and diesel rising, The Fuel Store team explores the reasons behind the increase, and what can be done to manage fleet fuel costs.

The impact of rising fuel costs

With geopolitical and economic tensions exacerbating price uncertainty into 2025 (more on this below), it can be hard for businesses and fleet operators to manage cash flow. Business vehicles, and the cost of running a fleet, represent a significant cost for many UK companies. As fuel costs climb, so do business operating expenses. Companies heavily reliant on transportation—such as delivery services, manufacturers, and import/export businesses—face difficult decisions about whether to absorb these costs or pass them on to their customers.

Higher fuel prices also affect consumer purchasing power, potentially leading to reduced demand and negatively influencing the broader economy. Beyond the direct impact of increased transportation costs and diminished consumer spending, rising fuel prices can disrupt supply chains, often passing additional expenses onto small businesses. With fuel prices fluctuating daily, forecasting expenses and managing cash flow becomes increasingly difficult. For small businesses, accurate cost projections are critical for maintaining long-term profitability.

Look for incremental savings

While not a magic bullet, corporate fuel cards can help shave a significant chunk off fuel costs – as well as saving valuable time on expense management. In 2023, the average saving for our fuel card holders sat at around 12.5 pence per litre. AdBlue users also stand to benefit from savings on bulk purchases.

Monitor and manage cash flow

While not a direct reduction in the cost of fuel, fuel cards can help when it comes to managing business cash flow. Weekly invoicing for fuel allows fleet managers to keep tabs on fuel spending, and budget for fuel costs, helping to manage cash flow more effectively. For customers such as Tomsetts Distribution, who had always bought full bunker loads of 36,000 litres of diesel every month, moving to fuel cards made a huge difference to cash flow. Pre-pay or fixed pricing options can help further.

Increase efficiency with data-driven fleet management

With driver shortages impacting efficiency, and costs escalating, taking a deep dive into fleet data can help fleet managers to identify actionable insights that directly impact the company’s bottom line. All of our fuel card customers get access to an online portal that provides data such as fuel spend and usage, transactions, card and budget management tools.

Those looking for deeper business insight can opt to add software called Fuel AI – a handy tool that can combine and analyse a host of data, helping fleet managers to quickly identify trends. Having access to this data can support data-driven decision-making, which, when used to its full potential, can save as much as 9% off fuel costs.

Avoid costly fines – stay compliant

With DVSA officers tasked with spot-checking vehicles, those who don’t comply will be subject to fines, and can be taken off the road – both of which can cost firms dearly. Driver Toolkit digitises the vehicle checking process, helping to reduce the costly fines associated with non-compliance. Managers simply send drivers a QR code, drivers complete the checks on the digital platform, and submit the result. As well as ensuring safety and compliance, fleet managers have a record of results, and data can be easily retrieved in the event of a DVSA roadside check.

Avoid the risk of card fraud

During July-September 2023, the DVLA received over 39,000 requests for information on drivers thought to be guilty of fuel theft – 77% more than 2022. Cases of fuel theft have been numerous in recent years, from a bin lorry driver who stole £42,000 of fuel, to a delivery driver who stole more than £56,000. While some cases involve huge amounts of money, others can be as simple as drivers using cards to top up personal vehicles – but the amount soon adds up. Investing in protection against card fraud is an important step to protecting your business against unexpected costs.

What influences fuel pricing?

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

Fuel costs – a year in review

As the list of factors outlined above suggests, the situation isn’t a simple one. The factors influencing fuel prices can vary from week to week – a topic we do our best to tackle via our weekly Fuel Price Pulse blog and customer communications.

This year has been no exception to the rollercoaster ride that is fuel pricing. 2024 was marked by escalating instability in Ukraine and the Middle East. Global economic challenges including a weak Chinese GDP fuelled fears of a global economic slowdown, while OPEC+ production cuts also impacted pricing.

Prices dipped to their lowest level for almost three years in September, when forecourt prices were nearly 7p per litre cheaper across the UK than the month before. Trump’s re-election in Q4 triggered market rallies and talk of sanctions. During the same period, Iran-Israel conflicts intensified, Ukraine deployed long-range missiles, and OPEC extended production curbs into 2026.

Fuel pricing – the current situation

In recent weeks, prices have been climbing steadily. Ongoing geopolitical tensions between Russia and Ukraine, as well as Middle East unrest, combine to create market uncertainty – a risk to oil-producing regions could impact supply – pushing prices higher. US Sanctions on Russia and Iran have also threatened to reduce supply and push prices upwards.

Meanwhile, data released by the US last week pointed 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. Business activities also accelerated more than expected in major European economies, including Spain, Italy, France, and Germany, which is also expected to boost demand. Meanwhile, traders are closely watching China’s stimulus plans, which could drive demand further. While these signs of economic recovery are positive, increased demand, combined with volatility in supply, tends to push prices higher. Cold weather has also put pressure on fuel supplies.

Choosing the right partner

Fleet management is a complex undertaking. Sustainability, digital transformation, e-commerce trends, risk management and workforce management will continue to drive change in 2025 – while outside influences will continue to impact pricing. Working with a supplier that can help to identify fleet and fuel efficiencies, however small, could make all the difference to the road ahead.

Speak to our team to find out more about how we can reduce your fleet fuel spend in 2025.

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.