The ceasefire may have calmed oil markets, but it has not yet brought much relief for UK drivers. UK petrol prices remain stubbornly high, even after crude fell sharply, raising fresh questions about how forecourt prices are set and why they seem to climb quickly but fall so slowly.
You will have seen the headlines. On Tuesday evening, President Trump announced a two-week ceasefire between the US and Iran, just hours before his own deadline to “destroy a whole civilisation” expired. Oil prices plunged and stocks surged as global investors breathed a collective sigh of relief. Brent crude lost about 13%, settling at $94.75 a barrel, its biggest single-day decline since April 2020 during the pandemic.
Brilliant news, surely? Time to celebrate at the pumps?
Not quite. As of 8 April, the average price of a litre of unleaded in the UK stood at 157.71p, up 25p since the war began, while diesel had exceeded 190p, up 48p since 28 February. Both fuels are at their most expensive since late 2022.
The crude price fell by 13% overnight. Your fuel bill barely moved. If you are wondering why, you are asking exactly the right question.
The Numbers Do Not Add Up. Or Do They?
At first glance, it looks like a straightforward swindle. Global oil prices crash on ceasefire news. Forecourt prices stay stubbornly high. The retailer pockets the difference. Story over.
The reality is more complicated, though not necessarily more flattering to the fuel industry.
Despite the sharp fall in futures, Brent crude is still well above the $73 per barrel level it sat at on 27 February, the day before the war began. Before the conflict, UK petrol was around 132p a litre. One dramatic day of trading does not erase five weeks of accumulated cost increases.
There is also the matter of what actually sits in your local forecourt’s underground tanks right now. That fuel was bought at wholesale prices from days or weeks ago, when Brent was hovering above $110 a barrel. The retailer cannot magic away the cost of inventory they already paid for. It takes between one and four weeks for lower oil prices to feed through to forecourts, reflecting the time required for existing, more expensive stock to be sold before cheaper wholesale purchases are reflected in pump prices.
So far, so reasonable. But here is where things get interesting.
The Rocket and Feather Problem
There is a well-documented asymmetry in how fuel prices respond to oil market movements, so well-documented it even has a name. Economists call it the “rockets and feathers” effect: prices shoot up like a rocket when crude rises, and drift down like a feather when it falls.
Retailers tend to pass on price increases more quickly than decreases, meaning drivers often feel rises within days but must wait longer for cuts. The CMA has flagged this pattern repeatedly. Consumer groups have complained about it for years. And yet here we are again, watching it play out in real time.
In our previous blog, we raised the question of whether AI dynamic pricing systems are now operating at UK forecourts, responding to wholesale market signals at machine speed. The ceasefire provides a telling test case.
When Brent surged through February and March, prices at UK pumps moved upward quickly. Unleaded recorded its largest weekly increase since the energy market turmoil of 2022. That speed of upward adjustment is consistent with automated pricing systems doing their job.
Now crude has fallen sharply. If the same automated systems are operating symmetrically, we should expect to see pump prices begin falling within days. If they do not, that asymmetry is very hard to explain as anything other than a deliberate or structural bias in how these systems are configured, towards protecting margin on the way down.
Watch the forecourt prices over the next ten days. They will tell you a great deal.
But There Are Legitimate Reasons Too
To be fair to the industry, not everything can be attributed to algorithmic margin-grabbing or old-fashioned profiteering.
The ceasefire, as of this morning, is extremely fragile. The agreement on safe passage appeared to be breaking down just hours after the ceasefire announcement, with tanker traffic through the Strait remaining at only a handful of daily vessels. As of Wednesday, the Brent spot price for physical barrels, the real-world price governing actual deliveries in the next 10 to 30 days, came in at $124.68 per barrel, nearly $30 above the June futures contract that had fallen so dramatically. That gap tells you everything: financial markets priced in hope, but the physical oil market is still pricing in reality.
The CEO of Kuwait Petroleum Corporation said it could take as long as four months for Gulf producers to fully restore their production to pre-war levels. Qatar’s Ras Laffan industrial complex, which accounts for around 20% of global liquefied natural gas production, has suffered damage severe enough to reduce its export capacity by 17%. As of Tuesday, 187 tankers laden with 172 million barrels of crude and refined oil products remained stranded inside the Gulf. That backlog will not clear overnight.
A fuel retailer looking at those physical market signals and deciding not to slash pump prices immediately is not necessarily acting in bad faith. They may simply be reading the same data as everyone else and concluding, quite reasonably, that this ceasefire could collapse before the week is out.
The Accountability Question, Again
In our last post, we asked who or what is setting your pump price, and whether AI dynamic pricing systems are partly responsible for the speed and pattern of price movements.
The ceasefire moment sharpens that question considerably.
If an AI pricing system can raise prices within minutes of a geopolitical shock, as the evidence suggests some can, then the same system is theoretically capable of cutting prices within minutes of a ceasefire announcement. The technology is not the constraint. The configuration of the system, the objective function it is trying to optimise, is the constraint. And that is a choice made by humans, by the companies deploying these tools.
Right now, there is no regulatory requirement for fuel retailers to disclose whether automated systems are setting their prices, no obligation to demonstrate that those systems respond symmetrically to market movements in both directions, and no audit trail that the CMA can examine to determine whether the rockets and feathers pattern is a structural feature of the algorithm rather than a coincidence of market conditions.
Rachel Reeves has already asked the CMA to be on high alert for unjustifiable price rises. Perhaps the more interesting question for regulators is whether AI pricing tools are being allowed to be unjustifiably slow on the way down.
What Should You Do Right Now?
Practically speaking, the RAC advises that drivers should not expect significantly cheaper fuel in the short term, although some smaller independent forecourts buying on a spot basis may be quicker to pass on any reductions. Shopping around matters more than ever. The new Fuel Finder Scheme, which came into force in February and requires retailers to report prices to third-party apps within 30 minutes, means that for the first time, drivers have near real-time visibility of where the cheapest fuel in their area is. Use it.
The broader picture, though, is this. We are in a two-week window. The ceasefire may hold and lead to a lasting agreement. It may collapse by the weekend. Either way, the structural questions raised by this crisis, about physical supply backlogs, algorithmic pricing behaviour, and the total absence of regulatory oversight of automated forecourt pricing, will not go away when the diplomats shake hands.
The rockets will fire again. Whether the feathers ever reach the ground, and how quickly, depends on decisions being made right now by people and machines whose logic nobody outside those companies is required to examine.
That should bother all of us.
Author: Deborah Holmwood, Client Change & Transformation Partner.
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