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Sir Keir Starmer’s cost-of-living tsar has called on the UK government to reconsider a planned fuel duty hike in September, as rising pump prices in the wake of the war with Iran add to pressure on household finances.
Lord Richard Walker, executive chairman of retailer Iceland, said on Friday that ministers should look at “extending … or increasing” the current 5 cents per liter cut, which expires later this year.
Walker, who as the prime minister’s “cost of living champion” has been exploring measures to help households with their bills since February, pointed to a recent move by Australia to cut fuel taxes by about 14 cents per liter.
“I think given where we are now, we need to think and talk about expanding or expanding it [the UK fuel duty freeze],” Walker told the BBC.
His comments came as British motorists are set to face diesel prices of £2 per liter within days after wholesale prices rose to their highest level in four years, adding to cost-of-living pressures reignited by conflict in the Middle East.
Alan Gelder, an oil products expert at Wood Mackenzie, said diesel prices at the pump are expected to surpass £2 per liter within a week after European diesel futures hit the equivalent of $211 a barrel, almost double the price of crude.
The loss of supplies from the Middle East has pushed up oil prices around the world, but diesel has made one of the fastest gains, with global buyers competing for remaining supplies.
Middle Eastern refineries have become more important to Europe’s diesel supply in recent years, after restrictions were imposed on purchases from Russia following the massive invasion of Ukraine in 2022.
“Each day that passes, the oil market tightens, causing prices to continue to rise,” Gelder said. “Diesel prices could be much higher.”
British motorists already saw the highest monthly rise in diesel and petrol prices ever in March, according to figures from the RAC.
The cost of unleaded petrol at the pump rose last month by 20 cents per liter and by more than 40 cents for diesel. According to RAC data, diesel is selling for an average of £1.85 per litre.
“Fuel prices have never risen so quickly in one month,” said RAC head of policy Simon Williams. “The increases that drivers have had to endure in March 2026 are far greater than those in the early days of the war in Ukraine.”
The Iranian threat to shipping through the Strait of Hormuz continues to prevent most Gulf oil from reaching global markets, and supplies are being depleted as countries dip into commercial and strategic reserves.
Britain only imports about a tenth of its diesel directly from the Middle East, but about 40 percent of British diesel comes from Dutch and Belgian refineries, which source a significant portion of their crude from the Middle East.
Starmer said last month he would keep a “close look” at the plan to end the fuel duty freeze, which has been in place since 2011, and crack down on “price gouging” by unscrupulous petrol retailers taking advantage of fluctuating market prices.
The British government has also privately tried to allay fears about possible supply shortages. But energy traders and fuel suppliers have warned that gas stations and refineries could run out of diesel supplies by mid-May if the conflict in Iran is not resolved.
Higher diesel prices feed quickly into inflation as most goods in Britain are transported by diesel-powered trucks.
While countries across Europe are facing similar pressures, the problem facing Britain was acute, said Benedict George, head of refined products at Argus Media, arguing that the country’s diesel supplies were lower than those of other European countries.
Additional reporting by Ashley Armstrong in London
