Diesel Slips Back Under £2 — Wholesale Is Down 6–8p, So How Much Should Come Off at the Pump?

For the first time since the start of September, diesel is heading in the right direction. RAC Fuel Watch puts the UK average at 199.90p a litre, back below £2 a week after it crossed that line at 200.01p on 2 October. Petrol is broadly flat at 174.79p.

The fall so far is tiny — about a tenth of a penny a litre. A 55-litre family diesel car still costs £109.95 to fill, which is £31.64 more than at the end of February, when diesel averaged 142.38p and the US–Iran conflict began. A petrol tank is £96.13, £23.08 more than in February. But underneath the pump price, the cost of the fuel itself has started to come down, and that is what normally leads pump prices lower.

Why diesel has turned

Two things changed in the first week of October. The first was the threat that hung over our last update: the US had been weighing a ban on diesel exports, which would have cut off the source of around a third of the diesel Britain imports. On 2 October the G7 agreed to release 100 million barrels of oil and fuel from emergency reserves over four months and, crucially, committed to avoiding restrictions on energy trade. The export ban is off the table for now.

The second is that diesel is being put first. The G7 said a substantial share of the release would be brought forward into the first 20 days, weighted towards diesel rather than crude oil, because refined diesel is now scarcer than the oil it is made from. On 7 October members of the International Energy Agency backed speeding up the release and prioritising diesel stocks. The IEA says its members still hold around 1.1 billion barrels of public emergency stocks, including more than 200 million barrels of diesel. Separately, BP has said it will adjust its refineries to produce as much diesel as possible.

Traders reacted quickly. The AA reported on 7 October that wholesale diesel costs had fallen by between 6p and 8p a litre, and its analysis of Fuel Finder data over one 24-hour period found 234 forecourts cutting their diesel price against 46 raising it.

How much should come off — and when?

Economists at Pantheon Macroeconomics estimate that the gap between crude oil and wholesale diesel in Europe has narrowed by around 12% since 30 September. If that is fully reflected in UK costs and passed on by retailers, they put the fall at 5p to 6p a litre at the pump, or about 2.5%.

There is a useful detail hidden in the AA's figure. Wholesale prices do not include VAT, which is added at 20% at the pump. So a 6p fall in what a forecourt pays is worth around 7p to the driver if it is passed on in full, and an 8p fall is worth nearly 10p. That is why the “5p to 6p” estimate should be seen as a reasonable expectation rather than a ceiling.

Timing is the harder question. Forecourts buy fuel in deliveries every few days, so lower wholesale costs take a week or two to work through even at retailers who pass them on promptly — we looked at how long that lag usually runs in oil prices fall on Hormuz hopes. And history shows pump prices tend to rise like a rocket and fall like a feather: increases arrive almost straight away, cuts arrive slowly. We explain why in how quickly should petrol prices fall and why fuel prices stay high when oil falls.

It can happen faster. In June, when hopes of a deal over the Strait of Hormuz sent oil lower, diesel fell by a record 16.6p in a single month — see diesel’s biggest monthly fall since 2000.

Petrol may be 5p too high

Petrol drivers have a separate grievance. The RAC believes the average price of unleaded should fall by as much as 5p a litre, because it is currently higher than retailers’ costs would justify. Its view is that some forecourts have raised their petrol margins to make up for the money they were losing on diesel — in effect, petrol drivers have been helping to hold diesel down. On a 55-litre tank, 5p is worth £2.75.

That makes shopping around just as worthwhile for petrol as for diesel. The gap between the cheapest and dearest forecourts in the same town is regularly far bigger than 5p — see why petrol prices differ in the same town.

What could still push prices back up

The fall is fragile. Details of the G7 release were still unclear a week after it was announced — including how much of the 100 million barrels is diesel and which countries will supply it — and the IEA’s governing board is expected to settle that on 14 and 15 October. Much of the release is reserves that had already been committed in March, brought forward rather than added, and none of it fixes the shortage of refining capacity behind the diesel squeeze. The IEA describes the diesel market as unusually tight, with shipping through the Strait of Hormuz still disrupted, and analysts expect prices to stay volatile through the winter.

The Budget could matter as much as the stock release

The RAC wants the Chancellor to extend and increase the fuel duty cut, or reduce VAT on fuel, pointing out that the Treasury’s VAT takings from fuel are exceptionally high while prices are this elevated. Without a change, duty goes up from 52.95p to 55.95p a litre in January — about 3.6p at the pump once VAT is added, or nearly £2 a tank. That would cancel out much of the fall drivers are hoping for now. The options are set out in Budget 28 October: the fuel duty decision, and you can see how much of each litre is already tax in how much fuel is taxed in the UK.

How to get the cut before your local forecourt does

A falling national average is made up of thousands of forecourts moving at different speeds. Some have already cut; others will wait. The live box above shows how many stations are already well below £2 — the trick is to find them.

National averages are from RAC Fuel Watch as of 9 October 2026. Wholesale figures are from the AA and Pantheon Macroeconomics. Tank costs are based on a 55-litre tank. Live figures come from the government Fuel Finder feed and refresh every 15 minutes.