Drivers are being cautioned that they may be paying more than necessary at petrol stations following the turmoil stemming from the Middle East conflict.
Competition regulators have intensified their monitoring of fuel suppliers over worries that reductions in wholesale prices aren't being fully reflected in what motorists pay. The Competition and Markets Authority (CMA) has expressed ongoing concern that insufficient competition within the fuel sector is resulting in drivers facing higher costs than warranted, though it found no proof that retailers intentionally exploited the recent Middle East tensions to hike prices.
In its latest assessment, the watchdog analysed fuel pricing through to the end of April and determined that elevated wholesale costs accounted for the bulk of the increases in petrol and diesel prices witnessed in recent months.
Nevertheless, it noted that average fuel margins - the gap between retailers' purchase price and selling price - continue to sit at historically elevated levels.
The regulator has also put retailers on notice that it's keeping a close eye to ensure that any future drops in wholesale prices are properly passed through to consumers at the forecourt.
Sarah Cardell, chief executive of the CMA, said: "We know prices at the pump are putting real pressure on drivers' pockets. While our analysis shows the rise in wholesale prices is the main reason for higher fuel prices, we remain concerned about weak competition in the sector, leaving drivers paying more."
She continued: "Retailers should be in no doubt that we are continuing to monitor prices and margins closely and expect any reductions in wholesale prices to be rapidly and fully passed on to drivers."
The CMA's latest conclusions emerge three years after its comprehensive fuel market investigation determined that competition amongst retailers was failing to function properly, permitting certain companies to sustain inflated profit margins at the expense of motorists.
While the regulator discovered no indication that retailers altered their pricing approaches to exploit the Middle East crisis, it noted that several businesses raised margins during March and April, with typical margins hitting 11.3p per litre.
It believes numerous retailers persist in adopting "passive" pricing strategies, mirroring rivals instead of proactively reducing costs to draw in customers.
The authority stated it would be especially troubled if present elevated forecourt prices continue despite enhancements in fuel availability and the steadying of wholesale expenses witnessed throughout April. It will now carefully scrutinise whether those improved circumstances result in reduced costs for motorists.
The alert arrives as the Government's Fuel Finder initiative aims to enhance transparency by enabling drivers to compare costs more conveniently. The CMA calculates motorists could save as much as £9 per tank by searching for better deals using price comparison platforms and navigation applications.
According to the regulator, supermarkets typically remain the most economical option for refuelling, while motorway service stations persistently levy the steepest charges and maintain a considerable premium.
In response to the findings, RAC head of policy Simon Williams welcomed the finding that retailers had not sought to profit directly from the Iran conflict, but warned that the ongoing absence of competition remained a significant worry.
"It's positive to have confirmation retailers haven't altered their pricing strategies as a result of the Iran war, but it's worrying the watchdog has concluded competition is still lacking in the road fuel market and that margins are still at historically high levels," he said.
Mr Williams noted that the CMA's forthcoming report, due in August, would be a vital indicator of whether reduced wholesale costs are being passed on to consumers.
"The wholesale price of diesel has already come down considerably but prices at the pumps have only dropped by around 8p since peaking on 15 April at 191.54p. The price of oil has now been under $100 a barrel for almost a week which is another positive sign for drivers and potentially a test for retailers as it should lead to lower forecourt prices."
The CMA confirmed it will release a further update in August and will embark on a more thorough examination of retailers' pricing strategies, with results anticipated in the autumn. The probe will look into whether the rollout of Fuel Finder is succeeding in boosting competition and driving down costs for motorists across Britain.