Diesel prices in the UK have now surpassed £2 per litre—the highest since 2022—amid disruptions from geopolitical tensions, refinery shutdowns, and trade barriers. The ongoing conflicts in the Middle East and Eastern Europe have tightened diesel exports, forcing UK fleet operators to rely heavily on domestic refining and steady supply chains.
Diesel Market Vulnerability
The UK imports nearly 55% of the diesel it consumes and holds stocks equivalent to approximately 42 days of diesel imports, compared to around 400 days in some European countries. This significant exposure makes diesel a fundamental corporate resilience issue for fleet operators.
The squeeze on diesel supplies began in the Middle East, where the conflict restricted the movement of crude and refined products from the Gulf. Even as crude flows began to recover, damage to refineries and lack of alternative product export routes have meant that diesel exports remain constrained.
Refining Capacity and Supply Chains
Refining capacity has also been impacted by conflict in Eastern Europe, with damage to Russian refineries resulting in reduced exports to countries not directly subject to the Russian diesel ban. The supply-demand gap in the diesel market remains tight due to significant drawdowns of stocks and global refineries operating at near maximum utilisation.
European diesel margins have risen to over $80 a barrel, up from $20 per barrel. Recent Russian export measures and European emergency releases may provide some temporary relief, but refineries would take months to repair, supply chains would have to be re-established, and inventory builds would create additional demand.
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Building Resilience
Fleet operators must now consider whether their organisations are resilient to an extension of the current disruption. The first priority is to understand their exposure and model several plausible price scenarios to identify where diesel costs are concentrated.
Procurement should also be tested for resilience, with assessments of how frequently prices reset, how exposed and concentrated supply chains are, and what happens if normal deliveries are disrupted. Hedging can provide financial resilience, and any programme should be aligned with expected consumption, risk appetite, and appropriate treasury advice.
Fleet operators should also accelerate practical efficiency measures, such as reducing idling, improving route and load planning, and using telematics to identify avoidable consumption.
Fleet operators that create resilience through foresight and planning will be best-placed to handle this shock. They will act with agility as market signals emerge. By understanding their exposure, testing procurement for resilience, and accelerating efficiency measures, fleet operators can reduce their reliance on diesel and build a more resilient operation. This approach will help them manage the risks associated with diesel price volatility.
Fleet managers cannot control geopolitical events, refinery outages or international trade policy. But they can control, at least to an extent, how much diesel their operations consume, how flexibly they procure diesel, how quickly costs are recovered and where alternative powertrains are viable.
