UK fuel prices breach £100 per tank, Iran war premium hits diesel and heating oil first, insurance and credit turn risk into a de facto blockade

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standard.co.uk

UK drivers are paying more than £100 to fill a typical family car again, after fuel prices rose sharply in the weeks following the start of the Iran conflict on 28 February. The Department for Energy Security & Net Zero put average unleaded at 148.8p per litre on 30 March, while diesel reached 176.5p; the RAC’s daily estimates are higher still, at 152.8p for petrol and 182.8p for diesel, according to the Press Association via the Evening Standard.

The same dataset shows how quickly a war premium moves from the Strait of Hormuz into household budgets without any physical shortage at the pump. Since 2 March, DESNZ data show unleaded up 16.6p per litre (13%) and diesel up 34.4p (24%). The RAC Foundation estimates motorists have paid an additional £544m for petrol and diesel since the day before the conflict began, with diesel accounting for £409m of that total. Heating oil, a more direct proxy for wholesale supply stress, has moved even faster: the government’s monthly figures show standard burning oil at 104.1p per litre in March, nearly double February’s 53.5p and the highest since the series began in 1989.

Those numbers are less about barrels than about contracts. In war zones, the first system to seize up is often not the port or the pipeline but the paperwork that makes a voyage financeable: insurance cover, letters of credit, and the risk limits of banks and trading houses. When underwriters raise premiums or refuse cover, ships can still sail, but many owners cannot justify doing so; when banks tighten credit lines, cargoes stop moving even if they exist. The result is a de facto blockade assembled by private risk committees rather than navies.

Governments typically respond by trying to push the cost back into the system—through fuel duty tweaks, price caps, strategic releases, or “support” packages for households and firms. But once volatility is priced into shipping and inventory, the bill tends to persist: wholesalers rebuild buffers, lenders demand more collateral, and insurers rewrite terms. The war premium becomes embedded in working capital and logistics, not just in spot crude.

In the UK, the immediate impact is visible in the arithmetic at the forecourt. The RAC says a 55-litre fill now costs £100.52, breaching the £100 mark for the first time since December 2022.

A conflict thousands of kilometres away has already produced a domestic figure that fits on a receipt.