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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?
Oil prices fell slightly this week. Uncertainty around oversupply and lower demand can often lead to lower fuel prices for consumers at the pump. Prices this week have been driven by speculation over OPEC+’s next move, slow demand, and ongoing uncertainty around trade.
OPEC+ may increase oil production in July
With a meeting of eight key OPEC+ members due to take place on saturday, there is speculation that the group will raise output again during July. Together, OPEC+ controls over 40% of global oil supply and the group meet regularly to decide whether to increase or cut oil production. Their decisions can raise or lower oil prices globally, affecting fuel, transportation, and energy costs. If they increase their output – especially at a time of steady or weak demand – oil prices, and fuel orices at the pump, may fall.
Global oil demand rose, but less than expected
Even though people are using more oil, the increase is around 250,000 bpd less than analysts had predicted. Weaker demand than expected can be a signal of slower economic activity or consumer spending. If supply keeps growing and demand doesn’t keep up, oil prices fall.
Tariffs in the U.S. continue to cause uncertainty
The situation with US traffics continues to be a bit of a rollercoaster. Earlier this week, a trade court put a block on many of the duties – a decision overturned by the federal appeals court on Thursday. Analysts have said that the uncertainty will remain as the tariff battles are dealt with by the courts. Trade tensions (especially with China) can hurt global economic growth – a slower economy means people and businesses use less oil, and discourages investment and reduces demand, which can pull prices down further.
Geopolitical tensions
President Trump is growing frustrated with both Ukraine and Russia, sparking fears he might abandon mediating peace talks. Trump called Putin’s actions irrational and inhumane, while Putin dismissed Trump as overly emotional. This could push prices up because markets will be cautious about the possibility of prolonged conflict, potential sanctions on Russian oil, or disruptions to supply routes. This uncertainty often leads traders to put prices up before any actual supply issues occur.
Looking Ahead
On balance, we predict the market will trade stably going into next week, 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.