PETROL prices have broken 140p a litre as the Iran war energy shock hits Brits at the pump with experts warning it could hit 170p in the near future.
It is now at 140.28p a litre, the highest it’s been since August 2024, figures show.
While diesel is 158.78p a litre, the highest it’s been since November 2023.
The US and Israel’s war with Iran shows no sign of easing after three weeks of strikes with Iran hitting back by targeting the critical passage of the Strait of Hormuz that carries oil through the Middle East.
This has led to rising global oil prices and it has already fed through to rising petrol prices in the UK – up over 8p per litre in just three weeks.
Experts fear that this will lead to inflation rising, with the Bank of England now expected to hold its base rate on Thursday.
Swaps have risen and mortgage rates have been going up across the board.
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said the price of petrol could soar to 170p in the near future.
He added: “The jump to 140.28p for petrol and 158.78p for diesel marks a painful energy shock for Brits, and prices could climb much higher. Analysts warn that if oil hits $100 per barrel, petrol may reach 150p. At $120, it could soar to 170p.
“This is incredibly tough for motorists, especially those in rural or car-dependent roles, with an average driver potentially facing over £320 in added annual costs. The economic ripple effects are severe. The Office for Budget Responsibility (OBR) predicts this spike could add 1% to inflation, pushing it toward 4% and beyond, and stalling the recovery we all so desperately need.
“Consequently, the Bank of England is expected to halt planned interest rate cuts, likely holding the base rate at 3.75% this March to prevent a price spiral with a growing possibility of a rate rise back up to 4% if the conflict persists. This shift has already caused mortgage rates to creep back above 5%, further tightening the squeeze on household budgets.”
A painful energy shock for Brits
Anita Wright, Chartered Financial Planner at Ribble Wealth Management, said inflation is at risk of going up again.
She added: “The Iran conflict is not creating an entirely new problem so much as accelerating an existing one: oil was already structurally underpriced, and any disruption in the region simply brings forward a sharper repricing. I would not view 140.28p a litre as a ceiling.
“If disruption to shipping routes and energy flows persists, petrol and diesel could move materially higher from here because the issue is not merely sentiment but the physical availability, movement and refining of oil and its by-products. The wider inflation impact could be significant. Oil is embedded in vast parts of the economy, directly and indirectly. It affects haulage, food distribution, manufacturing, farming, deliveries and general transport costs.
“So more expensive fuel does not simply mean a more expensive trip to the petrol station, it also feeds into supermarket prices, services and overall living costs. In that sense, higher petrol and diesel prices can act as a broad inflation amplifier.”
Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, said he can’t see an end to the Iran war.
He added: “War is one of the most expensive things a society can do and when the war affects oil, it’s going to push up the price.
“There’s no obvious end to this conflict and so I’d expect prices to remain elevated and may even go higher. If it stays high then it could start feeding into higher inflation as oil is such an important industrial input.”
Higher petrol prices can act as a broad inflation amplifier
Nouran Moustafa, Practice Principal & IFA at Roxton Wealth, said rising prices will hit Brits in their pockets.
She added: “My reaction is that this is exactly the kind of cost shock households do not need, because petrol is not a luxury for a lot of people, it is how they get to work, do the school run and keep life moving. Once fuel pushes through levels like this, people feel it immediately.
“If the war keeps oil markets under pressure, I would not rule out petrol moving further into the mid-140s, and diesel staying painfully elevated too. Brent crude has jumped above $100 a barrel again on supply fears linked to the conflict, which is why this matters beyond the forecourt.
“The inflation risk is real because higher fuel costs feed straight into transport, delivery and everyday business costs. UK CPI was 3.0% in January and Bank Rate is 3.75%, with the next BoE decision due on 19 March. If energy pressure persists, hopes for smoother rate cuts could fade very quickly.”
Photo by Erik Mclean on Unsplash.
