Key facts
- Farmers in the UK and US face significant increases in fuel costs.
- Rising crude oil prices are driven by Middle East conflict and Russia's diesel export ban.
- Red diesel prices have increased by approximately 10% in a few days.
- UK diesel prices have climbed to 183.5p per litre.
- US diesel prices are at their highest level in about four years.
Farmers in the UK and US are grappling with a substantial increase in fuel prices, primarily affecting diesel used for agricultural machinery and vehicles. This surge is attributed to a combination of geopolitical events and supply chain disruptions. Renewed hostilities between the US and Iran have driven up crude oil prices, while Russia's decision to extend its ban on diesel exports has further tightened global supply and pushed market prices higher. Alex Harrison, a fuel buyer at Fram Farmers, described the price increase as 'astronomical,' noting that red diesel costs have risen by 10p to 14p per litre in just a few days, representing about a 10% jump. The average price for UK motorists has climbed to 183.5p a litre. This volatility is causing significant challenges for farmers, who are uncertain about when and how much fuel to purchase, impacting their cashflow and operational planning. Many are adopting strategies of buying smaller quantities more frequently to hedge their bets. The global refining capacity squeeze, exacerbated by Ukrainian drone attacks on Russian refineries, has contributed to the situation. Brent crude has reached its highest point in six weeks, trading near $97 a barrel. The conflict in the Middle East has led to concerns about oil exports from the Gulf, with Tehran warning of potential disruptions. In the US, diesel prices have surged to their highest level in approximately four years. The impact extends beyond agriculture, affecting other businesses reliant on vehicle fleets, such as delivery and construction companies. Additionally, the price of paraffin, commonly used on farms for heating, has also seen a significant rise, impacting rural households preparing for winter.