Oil Prices Down but Petrol Prices Remain High in the UK: What's Going On and Will It Improve?
Brent crude prices have fallen to about $62–$64 per barrel, yet UK pump prices average around £1.37 per litre for petrol and £1.46 per litre for diesel. This is despite January's pump prices averaging £1.39 for petrol and £1.45 for diesel, even when oil costs were higher earlier in the year.
UK refining capacity is currently constrained with only four operational refineries. The shutdown of the Grangemouth refinery has left Scotland without domestic petrol and diesel production, increasing delivery costs. Additionally, high UK carbon charges make domestic fuel production less competitive compared to imports.
Industry representatives cite rising costs—including energy, business rates, minimum wage, employer National Insurance contributions, and forecourt crime—as factors contributing to higher prices passed on to motorists. The Petrol Retailers' Association notes that retailer margins are 3–4% after costs, similar to a year ago.
The Competition and Markets Authority (CMA) has long observed that drivers pay more than necessary and noted postcode lottery effects in fuel pricing. However, limited market data has made definitive conclusions difficult.
To improve transparency and competition, the CMA recommended a Fuel Finder scheme that would provide real-time price disclosure. The government plans to launch this scheme by spring 2026. The availability of real-time pricing data is expected to help drivers compare prices and encourage retailers to compete more effectively.
The CMA's next market update is expected within weeks and will include more extensive cost data. Regulators acknowledge that action is limited until recommendations are implemented and verified against retailers' operating costs. A formal annual report is also due later this month.
