Diesel hits £2 a litre as ministers insist UK supply is secure

The average price of diesel on UK forecourts has topped £2 a litre for the first time. The RAC said the cost of filling a typical family diesel car is now about £32 more than before the United States started its war with Iran. Petrol has also risen sharply, reaching around £1.75 a litre, up from about £1.32 just before the conflict. Diesel was around £1.42 before the conflict.

The government has insisted the UK is not facing a diesel shortage. Transport Minister Keir Mathis said Britain draws on a wide range of sources and is working closely with European partners to keep supply flowing. He said the freeze on fuel duty remains in place and there is no need for concern. He also linked the issue to wider geopolitics, saying allies need to work towards a resolution with the conflict in Iran so that the Straits of Hormuz and Bab-el-Mandeb stay open to trade.

Prices have been driven higher by the US-Iran conflict and by pressure on global diesel supplies. President Trump has hinted he could restrict or ban US diesel exports as he faces pressure to bring motoring costs down before US midterm elections next month. His team has also pushed European countries to release strategic reserves. The UK imports about half of its diesel, and 17% comes from America, so a US export ban would matter.

The European Union rejected the idea of a ban on US exports, saying it would undermine trust. The UK government has been in talks with allies about a coordinated response. Ministers say supply is diverse and resilient, but diesel is the fuel of business, so higher prices feed through haulage, delivery, agriculture, fishing and coach operators, and then into supermarket and shop prices.

Industry figures set out the scale of the cost. One coach company said its vehicles can hold 900 litres, costing £1,700 to fill up, and it has introduced a fuel surcharge. Its fuel spend is about £1.5m, and it faces an extra £750,000 a year because rates are up 50% to 60% since early February. A haulage company owner said his diesel bill has risen by about £4,500 to £5,000 per week, or about £250,000 over a year, and his firm has passed half of a new fuel surcharge to customers.

In a political debate about the response, one contributor said more than half of what motorists pay at the pump is tax and called for cuts. Another said a universal fuel duty cut would be wrong when most cars are not diesel and argued for a targeted package for exposed sectors, funded by windfall profits. A haulage boss called for duty rebates similar to those offered in France, Germany, Spain, Portugal and Romania, and warned that a planned October duty rise would add to costs.

The supply picture is also tight. A haulage boss said the UK has around 40 days of diesel in reserve, less than some other countries, and claimed the UK does not refine diesel itself. Market analysis noted that diesel and jet fuel are middle distillates from the same barrel as petrol, and that cleaner marine fuel has increased competition for that part of the barrel. UK refinery capacity is limited. The largest refinery, Fawley, has been on a maintenance outage. The US has large Gulf Coast refining capacity but also regional import problems and the Jones Act, which restricts shipping between US ports.

Analysts played down a reported Trump deal with Vladimir Putin to freeze some diesel, calling it a small volume and mostly political noise. They said a more significant move was an EU agreement to release diesel reserves, which the UK is not part of because it has few reserves. France, Germany and the Netherlands are expected to release a significant volume of diesel and crude oil over the coming months, which could help stabilise prices. Even so, one analyst said the geopolitical causes are beyond any British government's control.

Motoring groups warned that prices may stay high for some time. The RAC said even a quick resolution to global supply problems would not bring oil, gas and diesel prices down significantly straight away. The government continues to say there is no shortage and no need for concern, but the £2 diesel milestone has already raised costs for households and businesses across the economy.