As the current Middle East crisis continues to strangle international oil supplies, fuel prices are continuing to rise.

The government had previously announced new fuel duty rises, which have come under increased pressure from motoring groups and motorists.

It is believed that these potential fuel duty rises may be suspended to ease the burden on households and businesses in the UK.

Cutting costs

Chancellor Rachel Reeves is expected to abandon a planned rise in fuel duty amid growing concerns over rising petrol and diesel prices and wider cost-of-living pressures for motorists and businesses.

Reports over the weekend suggested the government is preparing to extend the temporary 5p-per-litre fuel duty cut, originally introduced in 2022, rather than allowing it to expire in September as previously planned.

Such a move would represent a significant policy reversal after months of Treasury resistance to calls for another freeze.

The planned increase would have effectively added around 5p per litre to petrol and diesel prices, raising costs for households and businesses already facing higher transport and energy bills.

Pump pressure 

The expected U-turn comes after weeks of volatility in global oil markets linked to conflict in the Middle East and fears of disruption in the Strait of Hormuz.

Reports indicate oil prices have risen sharply since the escalation of tensions involving Iran, pushing up wholesale fuel costs and increasing pressure at UK forecourts.

According to reports, petrol prices have risen significantly in recent months, with analysts warning that allowing the fuel duty cut to expire could have pushed inflation even higher.

The government is also understood to be concerned about the political impact of raising fuel taxes amid economic uncertainty and ongoing pressure on household finances.

On the road

If confirmed, the decision would mean drivers avoid a further increase in pump prices later this year.

For motorists who rely heavily on their cars, particularly commuters, rural drivers and tradespeople, the continuation of the 5p cut could save hundreds of pounds annually, depending on mileage.

Fuel duty currently remains one of the largest taxes paid by UK motorists.

The standard rate stands at 52.95p per litre, with VAT also applied on top of the final fuel price.

Motoring groups and business campaigners have long argued that raising fuel duty would disproportionately affect lower-income households and small firms reliant on road transport.

Campaign groups and taxpayer organisations have welcomed the reported decision.

John O’Connell, chief executive of the TaxPayers’ Alliance, said motorists would be “relieved” by the move.

Campaign organisation FairFuelUK has also been lobbying heavily against the rise, arguing that soaring fuel prices are already placing unsustainable pressure on drivers and small businesses.

Business groups warn that higher transport costs feed directly into inflation through increased delivery, logistics and commuting expenses.

Treasury dilemma

Despite the expected relief for motorists, the decision creates a financial challenge for the Treasury.

Fuel duty raises billions of pounds annually for the government, and freezing or further cutting it would reduce tax revenues at a time of continued pressure on public finances.

The UK’s budget watchdog has previously warned that repeated fuel duty freezes create a growing hole in future tax receipts.

Reuters reported estimates suggesting continued freezes could lead to a £3.6 billion annual shortfall compared with previous Treasury assumptions.

Critics also argue that repeatedly freezing fuel duty conflicts with longer-term environmental goals by reducing incentives to shift towards lower-emission transport.

Green campaigners have reportedly expressed frustration that another delay to planned duty increases could weaken efforts to cut emissions and encourage electric vehicle uptake.

A balancing act

The expected announcement reflects the difficult balancing act facing Reeves and Prime Minister Keir Starmer as they attempt to manage inflation, economic growth and political pressure simultaneously.

With inflation risks rising again and motorists facing increasing costs at the pumps, ministers appear to have concluded that another fuel duty increase would be politically and economically difficult to justify.

While no formal announcement has yet been made, reports suggest confirmation could come within days as part of a broader package aimed at easing pressure on households and businesses.

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