Fuel Price Pulse – 1st August

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 determine the price of petrol and diesel at the pump. They are influenced by a range of factors, including crude oil supply, demand, and pricing, 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.
 
Fuel prices this week:
 
Fuel prices: What’s Happening at the Pump?
While early-week trading appeared calm, underlying volatility related to geopolitics and supply/demand saw prices dip and rise again. We explore the factors impacting oil prices and the impact on fuel prices at the pump. 
 
Trade optimism supports demand
A new U.S.-EU trade deal removed the threat of broad tariffs and signalled stronger long-term cooperation. As part of the agreement, the EU committed to buying $750 billion in U.S. energy products over the next three years, boosting confidence in future energy demand. The deal also includes $600 billion in EU investment in the U.S., which further supports global trade stability. Meanwhile, on Tuesday, the U.S. and China resumed trade talks. While no agreements were made, the talks were seen as constructive, raising hopes for improved relations.
The U.S.-EU energy deal boosts confidence in long-term energy demand, supporting oil prices. A resolution to US-China trade talks could help boost demand for oil by supporting trade-related industries like shipping, logistics, and manufacturing.
 
U.S. tariffs take centre stage
President Trump intensified his stance on Russia during a visit to Scotland earlier this week, shortening his ceasefire deadline with Ukraine from 50 days to 10-12 days. If no agreement can be reached by then, Russia will face steep 100% tariffs.
Trump’s shortened ceasefire deadline and threat of 100% tariffs on Russia raise the risk of global oil supply disruptions. This kind of geopolitical uncertainty tends to drive crude prices up. Higher crude means higher prices at the pump for consumers.
The U.S. tariffs deadline officially passed today (August 1st), with the President announcing a sweeping expansion of tariffs (10–41%) covering over 90 countries late Thursday. Described by the president as “very smooth”, analysts warn of slowed oil demand due to economic drag from tariffs. 
The prospect of trade barriers impacting the global economy could weaken consumption, potentially offsetting some of the pressure from supply-side risks. This could lead to lower fuel prices if the slowdown is significant.
 
OPEC+ on watch ahead of Sunday meeting
Looking ahead, market attention is turning to the upcoming OPEC+ meeting this Sunday. The group has already confirmed a production increase for August, with current forecasts suggesting that output will remain stable through September. No further hikes are expected beyond that for now.
While this move could help ease ongoing supply concerns, it remains uncertain whether current production volumes will be enough to meet rising global demand.
 
Looking ahead – oil and fuel prices next week
With global trade developments and OPEC+ policies providing a mixed backdrop, we anticipate the market will continue to trade stably into next week.
 
General factors that influence oil and fuel pricing:
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 dollar fluctuations impact oil prices. A stronger dollar and fluctuations in exchange rates make oil more expensive in other countries, potentially lowering demand. 
Seasonal factors like winter heating and summer cooling demand can also increase oil consumption and pricing. 
 
Please speak to our team for more information on fuel card pricing, including advice on how to save time and money on fuel management. 
 
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.