Eurozone inflation hits three-year high of 3.8%

The average price of diesel in the United Kingdom has surged to a record £2.00 per litre, a 40.5 percent increase since late February when the US‑Israel war on Iran began disrupting crude and refined‑oil supplies from the Gulf. The RAC motoring group reported that filling an average family car now costs about £110, roughly £32 more than before the conflict, while unleaded petrol has risen 31.5 percent to 174.1 pence per litre, adding about £23 to a typical tank. Transport minister Keir Mather tried to calm concerns, insisting there is no diesel shortage in the UK, even as the Trump administration has warned Germany and France to release diesel stockpiles or face a US export ban. In response, the UK opened talks with European allies, and the EU energy commissioner Dan Jørgensen confirmed that Europe is discussing the release of reserves with all International Energy Agency members. French President Emmanuel Macron chaired a G7 video conference where France proposed that European nations free 50 million barrels of diesel from reserves and that IEA members release an equal amount of crude oil.

The price spike is driven by a sharp drop in refinery output after the Middle‑East war and damage to Russian facilities, which together have constrained refined‑product supplies far more than crude availability. Before the Ukraine conflict, Russia supplied 10‑15 percent of global diesel, and another 10 percent transited the Strait of Hormuz before Iran disrupted traffic in retaliation for US‑Israeli attacks. The reduced refinery capacity has pushed road‑fuel inflation ahead of broader oil‑price movements, prompting calls for political action to shield consumers. Capital Economics warned that a US diesel export ban could lift UK diesel prices to £3 per litre and lift inflation to 5 percent from 3.1 percent in August. Meanwhile, household energy bills are also climbing, with the quarterly gas‑price cap rising 4 percent, taking the typical British household’s annual dual‑fuel cost to £1,723 and projected to reach £1,999.

The escalating fuel costs are straining motorists, haulage firms, delivery services and small businesses that rely heavily on diesel, according to RAC policy head Simon Williams, who described the situation as “very challenging” for those with high mileage. Reports of European talks to release reserves briefly eased market pressure, causing Brent crude to fall 2.5 percent to $99.78 a barrel. Commodity strategist Ole Hansen noted that the main stress now lies in refined‑product supply rather than crude, as Middle‑East flows recover but refinery output remains limited. The situation underscores broader geopolitical tensions, with President Trump urging Ukrainian President Volodymyr Zelenskyy to halt attacks on Russian refineries to alleviate the global fuel squeeze, while the UK’s diesel reliance on the US—about 30 percent—highlights the interconnected nature of the crisis and the potential for further policy responses to mitigate inflationary pressures.

⚡ Effects Interpreter