Fuel Price Pulse – 11th July

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.