Fuel Price Pulse – 22nd August

We share our insights into the factors impacting fuel prices, including predictions for fuel costs as we head into next week.

What determines fuel prices?

Wholesale fuel prices determine the price of petrol and diesel at the pump. They are influenced by a range of factors, including crude oil supply, demand, and pricing, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government.
 
Fuel prices this week:
 
Fuel prices: What’s Happening at the Pump?
 
This week, the market has traded broadly steady, with only small moves compared to last. Geopolitical uncertainty, shifting supply signals, and mixed economic data all continue to have an impact.
 
Geopolitics

The focus has been on last week’s Trump–Putin summit in Alaska. While the meeting drew headlines, it offered few concrete results. Trump initially floated U.S. security guarantees for Ukraine, but later suggested any support would be limited, with Europe expected to take the lead. Talks between Putin and Zelenskyy are still up in the air. In the meantime, Russia is pushing ahead on the ground, and many think Putin isn’t rushing to make a deal. European leaders want a ceasefire before agreeing to any direct talks, while Trump’s move to pause new sanctions on Russia has only added to the uncertainty.

Supply and demand

Towards the end of the week, oil prices rose, putting them on course for their first weekly gains in three weeks. This reflects fading hopes of a quick peace deal and a larger-than-expected drawdown in U.S. oil stocks. Inventories fell by 6 million barrels versus expectations of just 1.8 million, suggesting stronger demand, which could push prices up.

Economic signals

Broader economic factors also played a role. The U.S. Federal Reserve Chair hinted at possible rate cuts in September. Lower borrowing costs could stimulate economic activity and fuel demand, pushing prices up. However, weak data from Germany could impact demand from Europe.

What this means for fuel prices

Headlines have hit the news suggesting that drivers should hold tight for prices to fall at the pump. However, with oil prices seeing an upward tick, and geopolitical risks unresolved, particularly around Ukraine, the balance of risks points toward slightly higher prices next week. Markets remain sensitive to both progress and setbacks on the diplomatic front.
 
General factors that influence oil and fuel pricing:

While geopolitical tensions can cause market uncertainty – especially in oil-producing regions such as the Middle East and Russia – global economic performance can slow demand and impact prices. 
Oil is traded in U.S. dollars, so dollar fluctuations impact oil prices. A stronger dollar and fluctuations in exchange rates make oil more expensive in other countries, potentially lowering demand. 
Seasonal factors like winter heating and summer cooling demand can also increase oil consumption and pricing. 
 
Please speak to our team for more information on fuel card pricing, including advice on how to save time and money on fuel management. 
 
The information provided in this post is for information only. It does not constitute financial advice. Pricing predictions are speculative and should not be relied upon for forecasting.