UK Petrol Prices Hit 4-Year Low as Costs Drop to 132.3p Per Litre

UK petrol prices have dropped to their lowest level in almost four years, bringing welcome relief to millions of British drivers facing ongoing cost-of-living pressures. According to the latest data from RAC Fuel Watch, petrol prices fell to an average of 132.3p per litre by the end of May 2025, marking the lowest point since early July 2021.

The significant price drop represents a decline from 134p at the start of May, with diesel also falling from 140.5p to 138.4p per litre. This 2p reduction means drivers are saving approximately £1 on every tank fill-up, with a typical 55-litre family car now costing £72.74 to fill with petrol and £76.13 for diesel.

Three Consecutive Months of Falling Prices

The May reduction marks the third consecutive month of falling fuel prices, providing sustained relief for UK motorists. Since the end of February 2025, when petrol averaged 139.65p per litre, costs have dropped by more than 7p per litre. Diesel has seen an even more dramatic reduction, falling 8p from its February average of 146.5p per litre.

Regional Price Variations Across the UK

Price variations across different regions of the UK remain significant, with Northern Ireland continuing to offer the best value for drivers. The province boasts an average petrol price of just 126.5p per litre—nearly 6p cheaper than the UK average. Diesel prices in Northern Ireland are even more competitive at 130.8p per litre, representing a saving of nearly 8p compared to the national average.

Cheapest Petrol Stations in the UK

Individual petrol stations are offering even better value, with Sainsbury's Shorehead store in Southgate, Huddersfield, currently selling petrol for just 121.9p per litre. This represents a saving of more than 10p per litre compared to the UK average, translating to over £5 saved on a typical tank of fuel.

Other notably cheap options include Asda's forecourt on Western Road in Park Royal, London, at 122.7p per litre, and Tesco at Western Avenue in Greenford, pricing petrol at 123.9p per litre. For diesel, the cheapest prices can be found at Sainsbury's Falls Road in Belfast at 126.9p per litre.

Government Policy Supporting Lower Prices

The current low prices are partially attributed to ongoing government support through fuel duty policy. The temporary 5p per litre fuel duty cut, first introduced in March 2022 during the initial spike in energy costs following Russia's invasion of Ukraine, remains in effect. In the Autumn Budget on October 30, 2024, Chancellor Rachel Reeves confirmed that fuel duty would remain frozen at 52.95p per litre through Spring 2025.

Market Factors Driving Price Reductions

Several key factors have contributed to the sustained reduction in UK fuel prices throughout 2025. Global oil prices have remained relatively stable, with Brent crude trading around $73 per barrel in mid-December 2024, compared to $76-77 per barrel a year earlier. Industry experts suggest that an oversupply situation in global oil markets is likely to continue supporting lower prices.

According to energy analyst Neil Atkinson, "Barring any geopolitical eruption, it's very difficult to see how crude oil prices in 2025 can be any higher than they are today because, although there's plenty of demand, an increase of supply is likely to be even greater."

Currency and Economic Factors

The strength of the pound against the US dollar also plays a crucial role in UK fuel pricing, as oil is traded in dollars. Recent currency stability has helped maintain competitive fuel import costs. However, experts warn that 2025 could bring currency effects, with potential US dollar strengthening versus other currencies possibly impacting UK fuel prices.

Industry Transparency Improvements on the Horizon

The UK fuel market is set for significant transparency improvements in 2025, with the long-awaited government Fuel Finder tool expected to launch. This system will require fuel retailers to report price changes quickly to a central database, providing drivers with real-time pricing information through apps and websites.

According to AA fuel price spokesperson Luke Bosdet, "Such a measure has transformed pump prices in other countries, and the AA hopes that it will lead to fairer prices, more choice for drivers and stronger competition." The Competition and Markets Authority's initiatives are expected to gather pace throughout 2025, potentially delivering even better value for consumers.

Looking Ahead: Price Forecasts for Summer 2025

While recent trends have been positive for motorists, experts suggest that price volatility could return later in 2025. Potential risks include geopolitical developments, particularly any escalation in Middle Eastern conflicts that could affect oil production and global supply chains.

However, the fundamental supply and demand picture suggests continued stability. OPEC+ maintains significant spare capacity, and US oil production remains robust. Energy consultant Colin Matthews notes that increased US oil production under the Trump administration could provide additional downward pressure on crude oil prices and, consequently, UK petrol station prices.

Seasonal Factors

As the UK approaches the peak summer driving season, demand for petrol typically increases. However, current market conditions suggest that any seasonal price increases are likely to be modest compared to historical patterns. The continued fuel duty freeze and competitive market dynamics should help maintain relatively affordable prices for consumers.

Impact on UK Households and Economy

The sustained reduction in fuel prices provides significant economic relief for UK households, many of whom are still managing cost-of-living pressures. For a typical household that fills up once a week, the savings since February amount to approximately £16 per month, or nearly £200 annually.

Beyond direct savings for consumers, lower fuel costs have broader economic implications. Reduced transportation costs benefit businesses across all sectors, from logistics companies to local tradespeople. This can help moderate inflationary pressures and support economic growth.

Environmental Considerations

While lower petrol prices provide economic benefits, they also raise questions about the UK's transition to electric vehicles and carbon reduction goals. Some environmental groups express concern that cheaper fossil fuels could slow the adoption of cleaner transportation alternatives. However, government policy continues to support EV adoption through various incentives and infrastructure investments.

Conclusion: A Welcome Respite for UK Drivers

The current low petrol prices represent a significant positive development for UK motorists, providing tangible relief from the high costs experienced during 2022 and 2023. While prices remain well above the historic lows seen in 2016, the combination of government policy support, favorable global market conditions, and increased market transparency suggests that drivers can expect continued competitive pricing throughout 2025.

For consumers looking to maximize their savings, the key is staying informed about local price variations and taking advantage of the most competitive retailers in their area. With prices varying by up to 10p per litre between different stations, a little research can result in substantial savings over time.

As the fuel market continues to evolve with new transparency measures and ongoing policy support, UK drivers can look forward to a more competitive and consumer-friendly landscape. However, the importance of shopping around and staying informed about the best local deals remains as relevant as ever.