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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:
Oil prices have fallen in comparison to last week. The decline is linked to concerns about U.S. tariffs, economic slowdown, and a surprising production hike from OPEC+
US Tariffs
On Wednesday, President Trump announced significant import tariffs on countries across the world, including China (34%), India (26%), Japan (24%), the EU (20%), and the UK (10%). Oil prices plunged 8% on Friday as China hit back, imposing an additional 34% on all US goods. As other nations consider whether to retaliate, the announcement of the highest tariffs in more than a century caused a sharp drop in global financial markets. The dollar is also failing, raising concerns about a potential US recession.
Although oil was exempted from the tariffs, it is anticipated that they will increase inflation, slow economic growth and create a “trade war”. This will hurt economic growth which will, in turn, slow demand for oil.
OPEC production hikes
Key members of the OPEC group (Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman) agreed to increase their joint oil output by 411,000 barrels per day in May – well above the estimated increase of 140,000 barrels. Trump’s tariff threats on key OPEC+ members (Russia, Iran, and Venezuela) could curb their supplies, countering planned output increases.
Transport issues could impact supply
Rhine water levels have dropped to a 12-month low – a key route for moving crude oil to inland refineries and storage facilities. When water levels drop, barges must reduce cargo loads or halt operations altogether, leading to supply bottlenecks and potential price increases. This can also force a shift to alternative transport methods, such as rail or trucks, which are less efficient and more expensive.
Other 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 demand in the Northern Hemisphere 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.