Fuel Price Pulse – 25th July

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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 prices: What’s Happening at the Pump?

Fuel prices in the UK stayed fairly steady this week, with oil markets balancing between good news on trade and rising concerns about global tensions. While prices didn’t move dramatically, that could change soon.

Here’s what’s been happening, and what it could mean for drivers across the UK.

 

Trade deals bring some relief

Trade deals support economic growth, which in turn increases oil consumption. Oil prices often rise when major trade agreements are made, or tensions ease. This week has seen a lot of activity in this respect, including: 

The new U.S.-Japan trade deal, which avoids tariffs and reduces barriers, boosted confidence and helped steady oil prices by easing fears of a broader trade war. Progress in U.S.-EU talks has also calmed concerns, with a possible deal to cap tariffs at 15% instead of 30%. However, uncertainty remains regarding China and India, which keeps some risk in the market.

Trade deals help boost economic growth, which in turn increases demand for oil and other fuels. When tariffs are avoided or reduced, businesses and consumers become more confident, leading to increased travel, transportation, and energy use, all of which contribute to higher oil prices. 

Supply and demand 

Oil prices rose this week due to a mix of tighter supply and strong demand signals. A larger-than-expected drop in U.S. crude stockpiles (down 3.2 million barrels) suggests that demand is outpacing supply, while global shortages of refined fuels, such as diesel and heating oil, are adding pressure. 

Russia’s plan to restrict gasoline exports in August and September has raised concerns about limited availability, leading to higher prices. Although potential new oil exports from Venezuela could ease supply tightness, earlier disruptions to Black Sea and Turkish exports also supported prices before normal operations resumed. 

Tighter global supply and rising oil demand are driving up wholesale fuel costs, which could result in higher prices at the pump.

Russian sanctions add pressure 

The EU has announced more sanctions on Russia, including a lower price cap on Russian oil and restrictions on ships that carry it. The U.S. is also thinking about new sanctions to put more pressure on Russia over the war in Ukraine. On top of that, President Trump has given Russia 50 days to agree to a ceasefire or face even harsher penalties, which could affect any country still buying Russian oil.

These actions could reduce the amount of oil available on the global market. When supply drops, prices tend to rise, which could lead to higher fuel costs.

 

Looking ahead – oil and fuel prices next week

Currently, UK fuel prices are stable, but the situation remains delicate. If tensions escalate or supplies tighten, we could see fuel costs rise again soon. With so many moving parts, from trade talks to sanctions and supply issues, UK drivers should be prepared for more price changes ahead.

 

 

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.