What Affects the Price of Petrol and Diesel? 6 Main Factors

The price on the forecourt sign is the end of a long chain. Here are the six main factors, with figures from early November 2026 where we have them: petrol about 170p and diesel about 198p a litre.

1. The price of crude oil

Crude oil is the raw material, and it is priced in US dollars per barrel. When the barrel price rises, wholesale petrol and diesel generally follow, with a delay of days to weeks. In late September 2026, Brent crude was reported back above $100 a barrel. See how oil prices reach the petrol pump.

2. The cost of refining

Crude has to be refined into petrol and diesel. If a type of fuel is in short supply, refiners charge more for it. That is a large part of why diesel is about 25p a litre dearer than petrol. Read why diesel is dearer than petrol.

3. The pound against the dollar

Because oil is bought in dollars, a weaker pound makes fuel dearer for UK importers even if the oil price in dollars does not change. A stronger pound does the opposite.

4. Fuel duty

Duty is 52.95p a litre on petrol and diesel, frozen since March 2022. It does not change with oil prices, so it makes up a bigger share of the price when fuel is cheap. Changes are announced in Budgets. See fuel duty explained.

5. VAT

VAT is 20% of the final price, duty included. When the price rises, the VAT per litre rises with it. Together, duty and VAT make up about 47% of a litre of petrol. See how much of a litre of petrol is tax.

6. Retailer margin and local competition

The retailer's margin is the part that varies most from one station to the next. A station with several competitors nearby tends to price lower, while one with no competition for miles can charge more. That is why a motorway station charged about 23p a litre more than a supermarket in our data. See how much more motorway fuel costs.

How the pieces fit together

Roughly, of a 174p litre of petrol:

• About 82p is tax (duty plus VAT)
• About 92p covers the fuel, refining, transport and the retailer's costs and profit

Of that second part, the first four factors above are outside any driver's control. The last one is the one you can influence by choosing where to buy.

What you can do about it

You cannot change the oil price, but you can change where you buy. The difference between the cheapest and dearest stations in the UK is over 50p a litre. Choose well and you can save more than any Budget changes would cost you.

Compare petrol and diesel prices near you and let the search find the best value.