UK government urged to take action on fuel prices with 2026 close to record territory
2026 is set to be close to the most expensive year for UK motorists in terms of petrol, and it could get worse next year.
Fuel prices have risen dramatically in 2026 as a result of the ongoing conflict in the Middle East and the resultant strain on oil supplies, and the situation in the UK could become even worse in January.
The government opted to cut fuel duty by 5p per litre in March 2022 after Russia’s invasion of Ukraine saw wholesale oil prices rocket, with knock-on effects for consumers.
That fuel duty cut has remained ever since, even when forecourt prices had dropped back to around £1.30 per litre by the beginning of 2026.
But the US-Israeli war on Iran that started at the end of February has created the same effect as the Russia-Ukraine war four years ago.
Petrol prices have risen by 31.6 per cent from 132.83p per litre at the end of February to 174.79p per litre on October 9, according to analysis from the RAC. At the same time, diesel briefly rose to over £2 per litre in October before coming back under that threshold.
The UK government opted earlier this year to extend the fuel duty cut to the end of December, but, with the conflict showing few signs of nearing a conclusion that would see a return to the pre-war status quo, an end to the fuel duty cut on 1 January 2027 could see prices rise even further by 3p per litre, with 2p per litre added again on 1 March.
The RAC has called for the government to again extend the fuel duty cut as prices reach record levels, or to reduce VAT.
“While it’s positive to see the average cost of a litre of diesel dipping back below £2 a litre, we’re a long way from being out of the woods when it comes to high fuel prices,” said Simon Williams, the RAC’s head of policy.
“Diesel remains around 57p a litre higher than before the US/Iran conflict, and petrol 42p higher.
“As things stand, this year is still set to be the second most expensive year on record for drivers.
“The Government has the power to take some of the sting out of higher fuel costs, either by extending and increasing the fuel duty cut or reducing VAT as they’ve done with domestic electricity.
“Without action, 3p a litre in duty will be added on 1 January, and another 2p on 1 March, which will only make prices at the pump even more expensive.
“At a time when Treasury VAT takings from fuel remain exceptionally high, drivers will be looking to this month’s budget for some much-needed relief.”
The autumn budget is set to be delivered on October 28. It will be the first delivered by John Healey since he became chancellor in July.
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