Fuel Price Pulse – 25th October

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

The market has been relatively steady this week, with a slight dip compared to this time last week. 

Early in the week, oil prices fell after news broke that Israel had killed Hamas leader Yahya Sinwar. Reports say an Israeli tank struck a building in Gaza, which held several armed men, leading to rising tensions. Meanwhile, demand concerns, especially from China, continued to weigh on oil markets.

However, as the week went on, oil prices began to climb. Focus turned to the Middle East after a failed drone attack on the Israeli Prime Minister’s residence. According to Israeli state broadcaster KAN, an unnamed official shared that Prime Minister Benjamin Netanyahu and Defense Minister Yoav Gallant are set to decide the timing and approach for Israel’s next steps in a Security Cabinet meeting later today.

Investors continue to await Israel’s response to a missile attack by Iran on Oct. 1, which could involve strikes on Tehran’s oil infrastructure. The U.S. reportedly obtained leaked documents detailing Israel’s plans for retaliatory actions, with President Joe Biden indicating that he is aware of the timing and details of Israel’s planned response. Iran has warned it will react “decisively” to any such moves. 

Towards the end of the week, oil prices rose by over 1% as geopolitical tensions in the Middle East—a key oil-producing region—stirred market concerns. Traders are also closely watching developments in ceasefire negotiations in Gaza. Meanwhile, Israel launched strikes on Iranian targets in Damascus, Syria. 

Fuel duty and the autumn budget 

Looking ahead, there’s growing speculation that the government may announce an increase in fuel duty next week. For context, fuel duty is a tax charged on each litre of fuel sold, and it’s a key component of the overall price at the pump. Currently, UK fuel duty is set at a flat rate per litre, and any increase would directly impact the cost of petrol and diesel across the country.

At The Fuel Store, we’re actively monitoring the potential for this duty increase, as it could affect the costs of the services we provide to you. Our goal is to help you manage any added expenses as seamlessly as possible. We’re also exploring different strategies to mitigate the impact, including options that may reduce costs or improve efficiencies across fuel-related expenses.

If an increase does occur, we’ll work closely with you to navigate the change. Rest assured that we’re committed to keeping you well-informed as soon as new details become available. In the meantime, our team remains available to answer any questions you may have.

Next week’s fuel prices

Looking ahead, we expect the market to trend slightly higher into next week.

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.