Diesel still costing close to a ’dismal’ £2 a litre despite oil price falls

Pump prices stay stubbornly high as leading bank official warns energy costs are likely to remain ‘elevated’

The price of diesel on UK forecourts remains stubbornly close to October’s record high of £2 despite a sharp fall in oil prices.

A litre costs an average of 197p, according to the AA, which described the situation as “dismal”. By contrast, petrol has fallen 6p to 168p from the peak of 174.7p in early October. That was the highest level since August 2022.

High fuel prices are putting huge financial strain on households and businesses and Christopher Waller, a US Federal Reserve governor, told a conference in London this week that energy prices could remain “elevated”.

He said a rise in tanker traffic through the strait of Hormuz came at a price: “The insurance now needed for ships making this passage, and the ship-to-ship transfer of oil necessary to guard against Iranian attacks, are reportedly boosting oil prices by $20 to $30 a barrel.”

Diesel production is also being affected by limited refining capacity and other constraints, Waller said, adding: “As a consequence, elevated prices for diesel in the United States are not expected to moderate as readily as crude oil prices would in a more peaceful Middle East.”

In the UK, the AA said that another 10p reduction could be on the cards for petrol because wholesale costs were falling. The wholesale cost of unleaded fell from 77p a litre to 68p in the second half of October, and now sits below 62p.

As a rule of thumb, each 5p reduction at the pump knocks £2.75 off the cost of filling a typical car’s 55-litre tank.

Luke Bosdet, the AA’s spokesperson on pump prices, said it was “hit and miss” but already possible to find petrol below 160p in certain areas, based on the government’s fuel finder data.

“London and the south-east stand out for not showing any fuel stations with the bargain petrol prices of northern England, Wales and even Scotland,” he said. “Some forecourts are still charging close to the peak prices of early October and, given how much wholesale costs have fallen since the middle of last month, that is unforgivable.”

The average diesel price is down only 2p a litre, from the all-time record of £2. With the wholesale cost down around 4p a litre since mid-October a further small reduction at the pump was possible, Bosdet said.