Will the temporary US-Iran ceasefire lead to cheaper petrol – and when?

Are we finally seeing light at the end of the tunnel of sky-high petrol prices after the Strait of Hormuz reopened? (Picture: Getty/Reuters)

The Strait of Hormuz has reopened in the eleventh hour as fears of fuel supply shortages have deepened, while prices have skyrocketed.

Consumers could be in for some respite after the Iran war sent petrol prices through the roof at forecourts across the UK as the key oil route was blocked.

Donald Trump and Iran have now agreed on a tentative, two-week ceasefire following the US president’s threat of total annihilation.

Tehran said it will allow the ‘safe passage’ through the strait during the pause in fighting – the announcement everyone has been hoping for.

However, fuel markets will not return to normal overnight, and trust in the ceasefire is overshadowed by the unpredictability of the warring parties that could throw everything back to square one.

How will petrol prices react?

The situation is bleak at petrol pumps in particular, although the industry has continued to insist there is no sign of fuel supplies running out.

One petrol station in central London, charging almost £3 a litre, was crowned the ‘most expensive’ in the UK.

One driver paid over £240 to fill up at a Gulf petrol station in Chelsea, London, on Saturday

Both petrol and diesel are now the most expensive they have been since late 2022.

So, how quickly will it all return to business as usual?

Simon Williams, RAC’s head of policy, said the best hope for drivers is that pump prices stop rising further and plateau in the coming days.

However, this will depend on three things – the ceasefire stability, whether oil shipments can move freely through the strait, and long-term oil production across the wider Gulf region, he said.

While the end of the disruption to the oil trade at the strait will take heat out of prices and stock markets, consumers will have to hang in there a little longer.

Anton Neike, an energy expert at the fintech company Taupia, told Metro that the benefits to drivers at the pump is ‘unlikely to be immediate.’

He said: ‘There is usually a delay between movements in oil and wholesale fuel markets and what motorists actually pay on the forecourt.

‘The same applies to household energy bills. Lower wholesale gas prices are clearly helpful, but the impact on domestic gas and electricity costs is less direct and slower to come through because bills are shaped by Ofgem’s price cap as well as wholesale market movements.

‘If the situation remains stable, lower wholesale costs could begin to feed through to fuel prices over the next week or two.’

How will flight prices change?

The sky-high oil prices have been trickling through to flights too, although airlines tend to be more protected from global price turmoil thanks to a process of buying jet fuel up front known as hedging.

However, airline bosses warned last week that unless the strait reopens, more flights would have to be cancelled due to jet fuel running short.

Ryanair told Metro today that while the airline doesn’t expect any near-term fuel shortages, the situation is ‘fluid.’

Some unleaded petrol pumps had run dry at a Sainsbury’s forecourt in Bristol on Sunda (Picture: Ben Birchall/PA Wire)

A spokesperson said: ‘At present, our fuel suppliers can guarantee supply to mid-end May. If the Iran war finishes soon then supply will not be disrupted. If the closure of the Hormuz Straits continues into May or June then we cannot rule out risks to fuel supplies at some airports in Europe.’

But because jet oil prices doubled already during March, airlines are likely to hike up flight prices ‘post Easter and later this summer,’ Ryanair warned.

The budget airline urged passengers to book as soon as possible to avoid the ‘inevitable air fare and accommodation cost increases’ it predicts.

British Airways said airlines are not currently seeing a disruption to jet fuel supply, but they continue to engage with suppliers and the government to ‘monitor the situation.’

EasyJet is not planning to make any changes to its flight schedule as a result of the geopolitical situation in the Gulf region, Metro understands.

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