UK diesel prices have reached an all-time record of 199.18p per litre, surpassing the previous peak set in June 2022 after Russia's invasion of Ukraine. The new high is driven by the ongoing US-Iran conflict and the blockade of the Strait of Hormuz, which has pushed Brent crude to $107.75 a barrel. Petrol is at 174.13p per litre, up 41p since the war began. Filling a family car now costs £110 for diesel, £96 for petrol — a £31 increase since the conflict started. The transmission mechanism from barrel price to economic pain is brutally direct. Dr Jonathan Owens of the University of Salford lays out the arithmetic: a single HGV burning 45,460 litres annually faces a £90,900 fuel bill at £2/litre. At £3/litre that becomes £136,400. Scale to a fleet of 100 trucks and you're looking at £4.55 million in additional costs. Those costs don't stay with the haulier — they pass through to supermarkets, manufacturing, construction, agriculture, e-commerce, and every other sector that moves goods by road. The energy squeeze extends beyond diesel. European gas prices are climbing, with the Dutch benchmark up 2.9% to €74.185/MWh and the British front-month contract up 2.7% to 184.64p/therm. The National Energy System Operator warned of a potential 1.4 gigawatt electricity shortfall from 4pm Monday, though it described this as a routine precautionary notice with no risk to customer supplies. Bond markets are pricing in the inflationary pressure. US 10-year treasury yields rose 3 basis points to 5.21%, while UK 10-year gilt yields climbed 4 basis points to 5.403%. This is uncomfortable timing for Chancellor John Healey, who speaks at the Labour party conference in Liverpool today. Iran's peace proposal transmitted via Qatari mediators was rejected by Trump on Saturday, though he indicated US negotiators would engage in further talks this week. The government has limited tools. The RAC's Simon Williams points out that another 5p/litre will be added to pump prices by spring if the planned fuel duty cut reversal proceeds. VAT receipts from fuel are running extremely high, creating a perverse incentive where the Treasury benefits from prices that punish consumers and businesses alike. Drivers and businesses will be watching the Labour conference and October's budget for any relief signals. Meanwhile, in a sharply divergent corner of the market, UK housebuilder stocks are surging after Andy Burnham unveiled "Your First Home" — a help-to-buy scheme offering first-time buyers a 20% equity loan with an initial interest-free period and a minimum 2.5% deposit. Barratt Redrow jumped 14%, Persimmon and Bellway rose 14-16%, and building materials suppliers Ibstock surged 21%. Analysts note critical details remain unclear: income caps, property value caps, and the financial contribution required from housebuilders. The housebuilder rally is real but conditional. Panmure Liberum's Adrian Kearsey flags that lower-priced builders like MJ Gleeson (up 19%) and Persimmon benefit most, while higher-priced developers like Berkeley Group may be excluded. If the housebuilder contribution hurdle is set too high, firms with stretched balance sheets like Crest Nicholson could be shut out entirely. The scheme addresses demand-side access but does nothing about the supply-side constraints — planning bottlenecks, materials costs, and labour shortages — that have plagued the sector for years.
