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Sir Keir Starmer’s value of dwelling tsar has known as on the UK authorities to rethink its deliberate gas responsibility improve in September, as rising pump costs within the wake of the Iran struggle add to stress on family funds.
Lord Richard Walker, govt chair of retailer Iceland, on Friday mentioned ministers ought to have a look at “extending . . . or enlarging” the present 5p-a-litre reduce, which is because of expire later this yr.
Walker, who because the prime minister’s “cost of living champion” since February is exploring measures to assist households with their payments, pointed to a current transfer by Australia to scale back gas tax by about 14p a litre.
“I believe, given the place we’re, we do have to be pondering and speaking about extending it or enlarging it [the UK fuel duty freeze],” Walker instructed the BBC.
His feedback got here as UK motorists are set to face £2-a-litre diesel costs inside days after wholesale costs surged to a four-year excessive, including to value of dwelling pressures which were reignited by the Middle East conflict.
Alan Gelder, an oil merchandise professional at Wooden Mackenzie, mentioned diesel costs on the pump have been anticipated to surpass £2 a litre inside every week after European diesel futures reached the equal of $211 a barrel, virtually double the worth of crude oil.
The lack of provides from the Center East has pushed up oil costs the world over however diesel has had a number of the most fast positive aspects, with the world’s patrons jockeying for the remaining provides.
Center Japanese refiners have turn into extra important to European diesel provides lately after restrictions have been positioned on purchases from Russia following its full-scale invasion of Ukraine in 2022.
“Day-after-day that passes, the oil market will get tighter so costs proceed to climb,” Gelder mentioned. “Diesel costs may nicely go a lot greater.”
Already, UK motorists noticed the best month-to-month rise in prices for diesel and petrol on file in March, in accordance with figures compiled by RAC.
The price of unleaded petrol on the pump rose 20p a litre and greater than 40p for diesel final month. Diesel is promoting for a median of £1.85 a litre, in accordance with RAC information.
“Gas costs have by no means risen this quick in a single month,” mentioned RAC head of coverage Simon Williams. “The will increase drivers have needed to endure in March 2026 far exceed these seen within the early days of the struggle in Ukraine.”
The Iranian risk to delivery via the Strait of Hormuz continues to forestall most oil from the Gulf reaching world markets and stockpiles are being eroded as international locations dip into business and strategic reserves.
The UK imports solely a few tenth of its diesel instantly from the Center East, however about 40 per cent of the UK’s diesel comes from Dutch and Belgian refineries, which get a good portion of their crude from the Center East.
Starmer final month mentioned he would keep “under review” the plan to finish the gas responsibility freeze, in place since 2011, and crack down on “worth gouging” by unscrupulous petrol retailers making the most of fluctuating market costs.
The UK authorities has additionally privately sought to calm fears about potential provide shortages. However vitality merchants and gas suppliers have warned that petrol stations and refineries may run down their stockpiles of diesel by mid-Might if the battle in Iran isn’t resolved.
Greater diesel costs feed via quickly into inflation as most items within the UK are transported by diesel-powered vans.
Whereas international locations throughout Europe face comparable pressures, the issue dealing with the UK was acute, mentioned Benedict George, head of refined merchandise at Argus Media, arguing that the nation’s diesel shares have been decrease than these of different European international locations.
Further reporting by Ashley Armstrong in London
