How global oil prices hit your pocket
When oil prices spike in global markets, UK pump prices follow within days. When they fall, relief at the forecourt takes weeks. This asymmetry ("rockets and feathers") has been documented by regulators and frustrates drivers consistently. Understanding why helps set realistic expectations about what you can and can't expect from falling oil prices.
The Brent crude benchmark
Almost all oil traded globally is priced relative to one of two benchmarks: Brent crude (the UK/European/African reference) or West Texas Intermediate (WTI, the US reference). UK petrol pricing follows Brent crude. When a barrel of Brent crude moves by $10, wholesale petrol prices typically shift by around 4–5p per litre. At today's tax levels, that translates to roughly 3–4p at the pump after duty and VAT effects.
The exchange rate amplifier
Oil is priced globally in US dollars. This means the pound-dollar exchange rate acts as an amplifier on UK pump prices. When sterling weakens against the dollar (as happened sharply in late 2022), the cost of oil in pounds rises even if the dollar price is unchanged. A 10% depreciation in sterling adds roughly 5–6p to the cost of a litre of petrol through the wholesale channel alone.
Sterling has been more volatile against the dollar since 2016. Periods of political uncertainty (elections, budget announcements, trade negotiations) that weaken the pound translate directly into higher fuel costs, even if global oil markets are stable.
OPEC+ and the production decision effect
OPEC+ (OPEC nations plus Russia) controls approximately 40% of global oil supply. Production decisions made in Riyadh or Moscow filter through to UK forecourts within 2–3 weeks. When OPEC+ announces production cuts, crude prices typically rise immediately on the expectation of tighter supply, and the pump price follows shortly after.
The 2022 price spike was driven by a combination of the Russia-Ukraine conflict (reducing Russian supply to Western markets), OPEC+ maintaining production discipline, and a surge in post-COVID demand. The convergence of all three factors simultaneously was unusually severe.
"Rockets and feathers": why falling oil prices don't help quickly
The Competition and Markets Authority found consistent evidence that UK retailers pass on oil price increases to consumers faster than they pass on reductions. The mechanics: when wholesale costs rise, retailers adjust pump prices within 1–2 days to protect margins. When wholesale costs fall, they adjust more slowly, effectively widening margins temporarily before competitive pressure forces prices down over 2–4 weeks.
High-competition markets (supermarket forecourts, urban areas with multiple stations) show faster pass-through in both directions. Rural monopoly stations show the most asymmetry.