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Supermarkets and refineries are on course to run down their stockpiles of diesel by mid-May if the conflict in Iran is not resolved soon, according to energy traders and fuel suppliers.
The warning comes after the UK government privately sought to calm fears about potential supply issues, calling on executives across energy, banking and fuel retail to watch for signs of stress.
“The situation is concerning,” said one trader, who added that it was the biggest physical disruption of oil and gas they had seen in their lifetime.
The government has been too complacent on the issue, and measures to restrict demand would likely be necessary unless prices rise sharply to curb demand, the trader added.
Another industry person agreed with the timeframe for supply issues, but added that stocks could last longer if further price rises put motorists off from filling their vehicles.
The UK imports only around a tenth of its diesel directly from the Middle East, but the indirect impact is far greater because of the cascading effect as refineries in Europe lose their crude supplies.
More than 40 per cent of the UK’s diesel comes from refineries in the Netherlands and Belgium, according to data from LSEG. Those refineries get a significant portion of their crude from the Middle East.
The UK’s monthly imports of diesel could fall by around 40 per cent if the Strait of Hormuz remains closed for a further two weeks, according to traders. This means that some diesel would still be available, but not enough to keep pace with current demand if prices do not rise.
Price rises could curb demand, but traders argue that pressure from the government will prompt retailers to try to limit the increases.
Diesel has risen by 34.3p to an average of 176.66p per litre since the conflict in Iran began, according to the RAC. The price of diesel at the pump in the UK has risen much more slowly than the wholesale price — partly due to retailers’ reluctance to raise prices — which has contributed to an imbalance in the market, traders said. Chancellor Rachel Reeves has warned petrol retailers against “profiteering” and “price gouging”.
The boss of Shell, Wael Sawan, said this week that the supply of energy products to Europe could be curtailed by next month. The International Energy Agency has recommended that motorists drive slower and people work from home to reduce energy usage.
Several Asian countries have already introduced demand-side measures, such as promoting remote work, to help address shortages of gasoline and petrol.
The UK government has resisted commenting officially on fuel supplies on the basis that public comments would have the opposite effect and spark panic buying. Privately, officials have tried to reassure the market that the UK has sufficient supplies. As well as the commercial stockpiles, the government also has emergency stockpiles.
The industry has already been closely following a national emergency plan for fuel that was devised in 2022 to manage shortages and includes the release of emergency oil stocks, rationing supplies and prioritising fuel supplies for essential and commercial vehicles. One person close to the situation said that the government and industry were “making sure it’s ready” if it needed to be enacted.
Nervousness about the supply of diesel comes after petrol stations in Australia, India and South Africa have witnessed shortages at garages as a result of panic buying.
In the UK, concerns rose on Friday after Allan Leighton, executive chair of Asda, said that a small number of the supermarket’s garages, largely in rural areas, had seen a run on the pumps due to an increase in demand and fuel volumes. Leighton said that he believed the issues were “temporary”.
Elizabeth de Jong, Fuels Industry UK chief executive, and Gordon Balmer, executive director of the Petrol Retailers Association, said: “Supply across the UK is flowing normally and there is no need for any change in usual buying habits.”
Meanwhile businesses have raised concerns that higher fuel prices will begin to feed into inflation. Hauliers, which transport the bulk of the UK’s goods around the country and rely on fuel, have started adding a 10 per cent surcharge, which industry experts said would pass through the supply chain.