Fuel Price Pulse – 23rd May

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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 Market Update – What’s Happening at the Pump?

The oil and fuel markets are holding steady compared to last week, but several global factors are influencing what we might see next at the pump. 

OPEC supply discussions

OPEC is considering increasing oil output for June and July, after already supplying more oil than usual in May. No final decision has been made yet, but this – along with the prospect of also additional Iranian Oil entering the market – has added to oversupply concerns. Basic supply and demand means more supply can help lower prices at the pump. However, too much can cause market instability.

US-Iran nuclear talks

Negotiations between the US and Iran continue, with the possibility of lifting sanctions on Iranian oil exports. If Iranian oil re-enters global markets, it could ease supply pressures and help stabilise or even lower fuel prices. However, as noted above, there are ongoing concerns around oversupply. 

Trade deals and tarrifs

A new trade agreement between the EU and the UK – which the government claims will add nearly £9 billion to the UK economy by 2040 – has added some stability to global markets. Meanwhile,  Donald Trump’s recent announcement of a 50% tariff on all European Union (EU) imports, set to begin on June 1, 2025, has introduced uncertainty into global markets. Trade deals can reduce uncertainty and support steady economic activity, while sanction often unstelle things – both, in turn, affect energy demand and pricing.

Tensions in the Middle East

Ongoing conflict in Gaza and Israel’s recent military escalation have caused concern among international allies. Free trade talks have been suspended.
Instability in key oil-producing regions can cause supply fears, pushing prices higher due to perceived risks. Geopolitical conflict can disrupt oil production or transport routes, which often results in price spikes.

Looking Ahead

We expect fuel prices to remain relatively stable in the short term, but potential changes in supply (from OPEC and Iran) and ongoing global conflicts could impact pricing in the coming weeks.

 

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.