Red diesel prices are returning close to their 2018 peak and could rise higher before the end of harvest after crude oil prices jumped on market concerns that supplies are likely to be tight.
The price of red diesel jumped by 6p in a month to about 60p/litre in May, and although prices have slipped back a few pence since then, these falls are being reversed as fears of a contraction in global supply come into effect.
AF fuel trading manager Spencer Hill said the average price of a 5,000 litre order of red diesel over the past six weeks had been 58.47p/litre but the Farmers Weekly fuel price survey for this week revealed prices of up to 60p/litre.
See also: Dissecting red diesel rules
Mr Hill said the increases are down to a rise in crude oil prices, which are trending towards US$80/barrel (£60.54/barrel), after armed conflict put a stop to Libyan exports.
Exports are also falling from oil-rich Venezuala and further reductions in global supply are expected this autumn when American sanctions on Iran come into effect.
Brent crude is now up from $49/barrel (£37.08) a year ago while the other industry benchmark, West Texas Intermediate hit its highest price since 2014 this week.
Saudi Arabia and Russia have promised an increase in output to compensate of some 1m barrels a day but it is not certain this will fill the deficit from other sources.
Fuel duty could rise from next year as well
The market movements come amid media reports the government is considering ending an eight-year freeze on fuel duty, which would affect purchases on both red diesel and standard road fuels.
At present it is frozen at 57.95p/litre for unleaded petrol and white diesel, and red diesel, referred to as marked gas oil, is 11.14p/litre, but according to reports in The Guardian, ministers are considering hiking rates from as early as next year.
The rumours have already provoked a furious response from fuel duty campaigners, including the FairFuelUK Campaign.
Lead spokesman Quentin Wilson said: “To raise fuel duty now amid profit warnings, flat wages and growth, weakening consumer spending, Brexit jitters and a rising oil price would be economic self-sabotage.
“This is absolutely the worst time to add extra supply costs to our parlous economy.”