Brent crude plunged roughly 14% to about £70 a barrel after hours on April 7, after the US announced a short ceasefire with Iran. The drop followed US President Donald Trump’s post that hostilities would pause for two weeks and an Iranian response ordering forces to cease fire. The Strait of Hormuz, which carries about 20% of the world’s oil, is central to the shift because reopening it would ease the deepest supply disruption in decades. Retail fuel relief could arrive, but forecasts and market dynamics suggest any fall at the pumps will be gradual and uneven.

Oil markets moved sharply on the news late on April 7. Brent crude, the global benchmark, slid by almost 14% to near £70 per barrel. Traders priced in the chance that a temporary pause in attacks would allow crude flows to recover through the Strait of Hormuz.

US President Donald Trump posted on Truth Social that he had agreed to "suspend the bombing and attack of Iran for a period of two weeks", and that Washington had received a ten-point plan from Tehran that offered a "workable basis on which to negotiate". Iran then issued a statement saying the pause was not the end of the war but that "all military branches should follow the Supreme Leader order and cease their fire." Those comments together pushed markets to trim a risk premium that had been built into oil prices for months.

What pushed prices so high

Earlier this year, prices rose steeply after the effective closure of the Strait of Hormuz. That route carries about 20% of global oil shipments. The International Energy Agency called the disruption the biggest the world has seen. Fatih Birol, head of the International Energy Agency, said the crisis was "more serious than the ones in 1973, 1979 and 2022 together."

Brent had climbed from roughly £46 per barrel at the start of the year to a peak near £89 per barrel in April. The jump reflected a sharp squeeze on supply expectations once shipments via the strait were curtailed. With evening trading on April 7, some of that pressure eased as markets priced in a temporary lull in attacks and the possibility of restored shipping.

Why pump prices may not fall fast

Retail prices don't track wholesale crude on a minute-by-minute basis. When oil rises, forecourt prices move quickly.

When oil falls, retailers often delay passing savings to drivers.

Analysts at the US Energy Information Administration offered a long view. The EIA said Brent would probably not fall below £67 per barrel until the final quarter of 2026. The agency also projected an average price around £57 per barrel for 2027. Those forecasts suggest any relief at the pump could be gradual rather than immediate.

As of April 8 in the UK, average forecourt prices stood at about 157.02 pence per litre for unleaded petrol and 189.42 pence per litre for diesel, according to RAC Fuel Watch. That gap matters because diesel tends to move differently from petrol in part due to demand from heating and heavy transport.

Diesel and heating oil: linked but not identical

Diesel and heating oil are chemically similar and often track each other in price. But physical distribution and seasonal demand create differences. A winter spike in heating demand can tighten diesel supplies because the products are interchangeable in some uses and in refinery yields.

Mastheads

A colder-than-normal winter in parts of the United States pushed up heating oil use. That increased demand cut into the diesel pool.

The result was a shorter supply of diesel than usual. When diesel supplies tighten, prices climb and they can reach levels close to record highs.

Jalopnik described how higher diesel prices ripple through the economy. Almost every long-haul truck in many countries runs on diesel. Trucks haul groceries and goods to stores. When trucking firms face higher fuel bills, they raise transport rates. Those higher costs get passed along the supply chain and show up in shop prices.

Container shipping and farm equipment are further links. Container ships use fuel similar to diesel, so their fuel bills rise when diesel-like fuels get dear. Most farm machinery runs on diesel. So higher diesel costs hit food distribution and farm operations as well.

How markets and retailers may respond

Refiners and retailers make individual pricing choices. They balance wholesale cost, stock on hand, and competitive pressure at local pumps. That mix explains why drivers often see fast increases and slower falls.

Dealers with older, higher-cost inventory may keep prices up until cheaper cargoes arrive. Supermarket chains and big brands sometimes offer cheaper pump prices to attract customers. Independents can lag or lead, depending on local competition.

Wholesale futures will guide trading desks and refinery runs in coming weeks. If the ceasefire holds and shipping via the strait returns, those futures are likely to stay lower than the April peak. But the EIA forecast warns that wholesale levels could stay above pre-crisis norms through 2026, and then average lower in 2027.

Some users get immediate relief when wholesale drops. Operators with thin margins, like airlines and large fleets, often hedge fuel and may not see instant savings. Retail consumers usually wait longest. Commuters and households using heating oil could face mixed outcomes this season.

Regions that relied heavily on heating oil during a harsh winter saw the tightest diesel markets. Those areas may feel constrained supply longer than places where winter demand was normal. The mismatch between heating-season demand and refiner output schedules can keep diesel relatively costly even as crude weakens.

Shipping access through the Strait of Hormuz is a key operational factor. If vessels can transit normally, seaborne flows of crude and product are easier. When the strait is restricted, markets add a geopolitical premium to prices. The two-week pause announced by the US and followed by Iran’s order to stand down altered those calculations overnight.

Logistics constraints inside consuming countries matter too. Diesel distribution depends on road and rail networks. If local fuel stocks were drawn down during the cold spell, pumps could remain tight until refineries and imports rebuild inventories.

History shows asymmetric pass-through. Prices shoot up quickly when risk or costs rise. They drift down slowly when risks abate. That asymmetry reflects retailer behaviour and inventory timing. It also reflects contract structures for large buyers, which often fix prices ahead.

For ordinary drivers, the result is familiar. Forecourt prices may not match the scale of the overnight crude fall. Diesel users might see a smaller or slower drop compared with petrol users because of the winter-driven supply squeeze described above.

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If the pause holds, wholesale prices may fall from April peaks, but retailers usually pass savings on slowly and unevenly to consumers.

This article was created with AI assistance.