Drivers across the UK are once again feeling the pressure at the pumps as the price is going high. Starting in 2026, petrol and diesel prices have begun going upwards, even as global oil prices tumble to levels not seen in years. For many drivers, the situation feels confusing and even frustrating.
As of mid-January, the average price of petrol in the UK is around 134–135 pence per litre, while diesel is hovering near 143 pence. These figures are lower than the peaks recorded during 2025, but the price remains noticeably higher than many expected, especially given the sharp fall in crude oil prices.
Global Crude Oil Prices Are Increasing
Petrol prices in the UK are closely linked to international crude oil prices. When oil-producing countries reduce supply or global demand rises, prices go up, which makes the vehicle owner more frustrated.
Key reasons oil prices rise:
- Production cuts by major oil-exporting nations
- Increased demand from fast-growing economies
- Geopolitical tensions affecting oil supply routes
Even a small increase in crude oil prices can quickly raise petrol costs at UK pumps.
The global benchmark for oil ‘Brent crude’, has dropped to around £60–61 per barrel in early 2026, which is nearly 20% lower than at the end of 2024 and marks one of the weakest price points in several years. In theory, such a decline should translate into cheaper fuel for consumers, but the price is going higher.
Elevated Retailer Margins and Weak Competition
One of the biggest reasons petrol prices are staying stubbornly high lies with fuel retailers themselves. The Competition and Markets Authority has repeatedly warned that retailer margins remain well above historic averages.
While wholesale fuel costs have eased, many retailers have been slow to pass those savings on to customers. The prices of petrol rise quickly but fall slowly, which means drivers often feel the pain of petrol price increases immediately, while decreases in price arrive late.
Although supermarket fuel margins have come down slightly, overall competition remains weak in many areas, allowing higher spreads to persist.
Weak Pound Makes Fuel More Expensive
Oil is traded globally in US dollars, not pounds. When the pound weakens against the dollar, UK fuel importers end up paying more even if oil itself is cheaper.
In early 2026, currency fluctuations have continued to destroy some of the benefits of falling crude prices. Add refining, storage, and distribution costs into the mix, and the savings that should reach the forecourt are significantly diluted.
Biofuel Rules Are Adding Costs
Another factor quietly pushing prices up is environmental policy. Under the UK’s Renewable Transport Fuel Obligation, suppliers must blend an increasing proportion of biofuels into petrol and diesel.
Biofuels are designed to cut emissions, but biofuels are generally more expensive to produce than traditional fuels. The result is a small but steady increase in costs, which ultimately shows up on pump price boards.
Global Uncertainty Still Matters
Although major supply disruptions have eased, the oil market remains sensitive to geopolitical uncertainty. Ongoing tensions in parts of the Middle East, along with concerns around supply from countries such as Venezuela, have kept markets volatile. This volatility discourages deeper and more sustained price cuts at the retail level.
What About Fuel Duty?
Fuel duty remains frozen at 52.95 pence per litre until later in 2026, offering some protection for drivers. However, analysts warn that phased increases from September could push prices higher again, regardless of oil market trends.
What Can Drivers Do Now?
While consumers have little control over global markets, there are ways which can make the pocket softer:
- Shop around: Prices vary by location and retailer. Northern Ireland often has the cheapest fuel in the UK.
- Use comparison apps: Tools like ‘PetrolPrices’ and the government’s upcoming Fuel Finder scheme can help identify cheaper stations nearby.
- Drive smarter: Smooth acceleration, correct tyre pressure, and regular vehicle maintenance can noticeably improve fuel efficiency.
Will Prices Fall Later in 2026?
Many analysts expect global oil supplies to remain strong while demand growth slows through 2026. That should, in theory, put downward pressure on fuel prices. Whether drivers actually benefit depends largely on retailer behaviour and competition.
For now, rising pump prices serve as a reminder that cheaper oil doesn’t automatically mean cheaper fuel and that UK consumers remain exposed to both international forces and domestic market practices.
