Fuel Price Pulse – 1st November

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

This week, oil and fuel prices experienced fluctuations, with underlying tensions in the Middle East and OPEC+ actions driving market volatility. 

At the start of the week, oil prices dipped slightly despite escalating geopolitical risks, largely due to robust global supply levels. 

OPEC oil production plans 

OPEC+ looks likely to delay the planned increase in oil production by a month or more, due to ongoing concerns about low demand, falling prices and rising supply. The group was scheduled to raise output by 180,000 barrels per day in December – a delay already postponed from October. This shift came amid reports that oil prices could reach $60 per barrel by early next year if geopolitical tensions continue.

Middle East tensions 

As the week progressed, oil prices rose as tensions spiked.

Mid-week, oil prices rose roughly 3% following news of Iranian missile strikes on Israel, an escalation that raised fears of further disruptions. Oil prices rose further today, (Friday) after reports that Iran was preparing a retaliatory strike on Israel from Iraq in the coming days. Such instability fuels concerns that a targeted strike on Iran’s oil infrastructure could impact Iranian oil production and export routes. 

Although markets remain wary, there has been little long-term impact on prices so far due to global oil inventories. 

Fuel duty 

In the UK, the decision to maintain the fuel duty freeze has brought a sense of stability to fuel markets, offsetting some of the concerns related to Middle East tensions. 

Next week’s fuel prices

We predict the market will continue to trade stably heading into next week.

Alarms continue to sound across Israel – and it’s expected that Israel will not hesitate to widen its military offensive to hit Iran directly. An Israeli attack on Iranian oil production or export facilities could cause significant disruption. 

The market is likely to stay stable over the coming weeks if OPEC increases production this winter as planned, which would counterbalance any immediate disruptions caused by escalating conflicts in the Middle East​. However, with a decision due from OPEC in the coming days, this is yet to be seen. 

There is also a possibility that the outcome of the US election will have an impact on oil prices, as Harris and Trump hold differing views on Iran and Russia, two major oil producers.

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.