Reeves expected to shelve fuel duty rise amid high petrol prices

Chancellor Rachel Reeves is expected to announce this week that the government will abandon a planned increase in fuel duty, a move that would maintain a temporary reduction introduced in 2022. The decision comes amid sustained high fuel prices linked to conflict in the Middle East and political pressure over the cost of living.

The chancellor had previously extended a 5 pence per litre cut in fuel duty until the end of August this year, with plans to gradually reverse the cut beginning in September and concluding by March of next year. Multiple reports indicate that plan will now be shelved, a reversal expected to cost the Treasury an estimated 2.4 billion pounds in foregone revenue.

Fuel prices have risen sharply since the outbreak of conflict involving Iran earlier this year, which led to the closure of the Strait of Hormuz, a critical channel for global oil shipments. According to industry data, the average price of petrol has risen from approximately 132.9 pence per litre to over 157 pence per litre since the conflict began, with diesel prices experiencing an even steeper increase. The ongoing disruption has kept global oil prices elevated, maintaining pressure on pump prices.