Pressure Builds on Fuel Margins Through September

UK motorists are starting to see pump prices rise after months of stability, as retailers finally respond to sustained increases in wholesale costs. The last three months have put pressure on retail margins, and September has marked a turning point in the market.

Wholesale Costs Climbing Since July

Since the start of July, wholesale unleaded (E10) has increased by around 5 pence per litre (ppl), while pump prices over the same period have risen by just 0.5ppl. Diesel has followed a similar trend, with wholesale costs climbing 3.5ppl against a 2ppl rise at the pumps. This growing gap has weighed on retailers, who have absorbed some of these price increases but are now beginning to take action.

September: A Shift at the Pump

September has seen the most pronounced change. Since the 9th of the month, there have been more than eight times as many daily increases in pump prices as decreases across the UK. On average, supermarket unleaded rose by 0.8ppl, while diesel climbed 0.7ppl. National averages remain relatively steady, but regional variations show that some drivers are already feeling the pinch more than others. For motorists in Scotland and the East of England, the impact has been sharper, with unleaded rising by 0.93ppl and 0.66ppl respectively.

The Global Oil Market: Stability and Risk

Brent crude has traded in a relatively narrow band of $65–70 per barrel since late June. This stability masks significant underlying pressures. On the one hand, the coalition of oil-exporting countries, OPEC+, continues to increase production quotas, which should weigh on prices. On the other hand, geopolitical risks remain high.

Ukraine’s continued drone strikes on Russian refineries have taken an estimated 640,000 barrels per day of refining capacity offline. The September attack on Russia’s Primorsk port, a key export terminal on the Baltic coast, further disrupted product flows and helped support global prices. With diesel already in short supply in Europe, these supply disruptions add further uncertainty for the months ahead.

Additional Price Pressures: Ethanol Costs

For petrol drivers, there is another factor to consider. The price of Ethanol, a key component blended into unleaded petrol (E10), increased by almost 15% in September. This alone has added around 0.6ppl to wholesale unleaded costs, compounding the squeeze retailers are facing.

Looking Ahead

In the short term, motorists should prepare for further gradual price increases at the pump, particularly for diesel. Margins remain under pressure, and if wholesale prices stay elevated, retailers will have little choice but to adjust. The diesel–petrol price gap may widen again if supply disruptions in Europe persist.

In the longer term, however, the picture looks different. Analysts are broadly forecasting weaker oil prices into 2026 as global supply continues to outpace demand. Goldman Sachs, for instance, expects Brent crude to average $64 per barrel by the end of 2025, before easing further to $56 per barrel in 2026. For UK motorists, this suggests that while short-term pain is likely, relief could be on the horizon in the medium term.