UK petrol prices rise to highest this year as US attacks Iran – business live | Business
UK petrol prices hit highest this year
The AA’s rival, the RAC, has called it: UK petrol prices have reached the highest this year after Donald Trump renewed attacks on Iran.
RAC head of policy Simon Williams said:
In very unwelcome news for drivers the average price of petrol has hit a new Iran War high of 160p a litre having increased more than 9p (9.38p) since falling to a low of 150.59p on 6 July. Diesel has now shot up 14.5p since its low point on 9 July to 179p, but fortunately is still 12.5p below its conflict high of 191.54p on 15 April.
This means the cost of filling a family-size car with unleaded has gone up to £88 while a tank of diesel is £10 more. The wholesale price of petrol eased very slightly this week but it is not enough to make a difference at the pumps. Diesel looks set to keep on rising and is likely to reach 185p a litre in the next few weeks, barring any major oil price reduction.
Key events
Gwyn Topham
High fuel prices have slashed profits by a third at British Airways owner International Airlines Group (IAG).
The group’s pre-tax profits fell to €995m (£852m) in the last quarter, from €1.5bn (£1.3 bn) in the same period in 2o25.
Fuel costs rose by more 400 million euros as the price spiked due to conflict in the Middle East, despite most of IAG’s requirements being hedged at a lower price.
Revenues were up 1% with passenger numbers flat.
Chief executive Luis Gallego said the results demonstrated IAG’s “excellent fundamentals” despite geopolitical headwinds.
British Airways chief executive Sean Doyle said that the airline was transforming its head office with better technology, and “driving efficiency because more and more transactions can be serviced online”. Around 200 jobs have gone and Doyle said AI could drive more efficiency, but added: “At the same time, we’re recruiting a lot more frontline people that are growing the airline. The net employees of BA are increasing.”
He said BA was continuing to “monitor closely” the effects of EES, the EU’s entry-exit system, which has sparked concerns of summer queues, but there had not been flight delays or missed flights so far. Doyle said: “We do have the odd flash point pop up. But we deal with this.”
UK petrol prices hit highest this year
The AA’s rival, the RAC, has called it: UK petrol prices have reached the highest this year after Donald Trump renewed attacks on Iran.
RAC head of policy Simon Williams said:
In very unwelcome news for drivers the average price of petrol has hit a new Iran War high of 160p a litre having increased more than 9p (9.38p) since falling to a low of 150.59p on 6 July. Diesel has now shot up 14.5p since its low point on 9 July to 179p, but fortunately is still 12.5p below its conflict high of 191.54p on 15 April.
This means the cost of filling a family-size car with unleaded has gone up to £88 while a tank of diesel is £10 more. The wholesale price of petrol eased very slightly this week but it is not enough to make a difference at the pumps. Diesel looks set to keep on rising and is likely to reach 185p a litre in the next few weeks, barring any major oil price reduction.
Morrisons reveals 5,000 job cuts after £900m loss
Sarah Butler
Morrisons has revealed losses widened to £926m last year and it cut almost 5,000 jobs as the Bradford-based supermarket continues to struggle with heavy debts and competition.
Pre tax losses widened in the year to October 2025 from £612m in the year before as sales rose 3.2% to £15.8bn despite hefty grocery inflation throughout the year.
A spokesperson for Morrisons said it had: “demonstrated our resilience in the face of some tough external headwinds,” which included a cyber-attack on a key IT provider, rising inflation and government cost increases.
The company said debt and interest costs were both reduced and “the underlying performance of the business was robust”.
At the year end net debt was £3.2bn, down 46% since Morrisons was bought by private equity firm CD&R in 2022. Interest costs were reduced by 29% to £281m.
It said profits had been hit by a write down on the value of the McColls convenience store estate before it closed dozens of the small outlets last year.
However, the accounts filed at Companies House show Morrisons reduced staff numbers by 4,912 as it ditched a newspaper delivery service and reduced jobs at head office and in its Rathbones bakery division.
Eurozone inflation nudged up from 2.8% to 2.9% in July, but economists are worried about the possibility of further price increases down the line given the US’s continued attacks on Iran.
Core inflation rose by 0.1 percentage points, to 2.5%, marginally above the 2.4% expected by economists.
August inflation is likely to be significantly higher, because of higher oil prices when the Donald Trump decided to renew bombing against Iran.
Bert Colijn, chief economist for the Netherlands at ING, an investment bank, said:
While energy inflation is on the move again, the question remains when second round effects will show up in core inflation data. The increase from 2.4% to 2.5% in core inflation in July was small, but does reflect both goods and services inflation trending slightly higher.
We do expect goods inflation to still rise from the current inflation rate of 0.9% (an increase from 0.8% in June), but so far there has not been much movement. While businesses continue to indicate caution in increasing selling prices, the months ahead should bring more pass-through of higher input costs.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, a consultancy, said that he thought the data would persuade the European Central Bank to raise interest rates by 0.25 percentage points at its September meeting.
Vistesen said he expected that to be “the final increase before the ECB pauses to assess the outlook” – although who knows what will be happening in Iran by then?
Pantheon’s forecasts predict that energy prices will cause a large part of inflation over the next six months, as the below chart shows.
The story piquing the interest of the financial press this morning is that of Leopold Aschenbrenner, the AI Wunderkind (he’s German-born) who has been forced to sell off his fund in a fire sale after the AI boom ran out of steam.
The 24-year-old had persuaded a lot of people to give him a lot of money for a hedge fund, after previously working for OpenAI and the FTX Future Fund, a charitable arm of the fraudulent crypto empire of Sam Bankman-Fried, who is now in prison. Aschenbrenner ploughed that money into debt-fuelled bets on artificial intelligence companies, earning huge returns until he found out that stocks can also fall.
The hedge fund was called, unimprovably, Situational Awareness. (It took its name from a viral essay Aschenbrenner wrote in 2024.)
The scent of Schadenfreude today in financial media, after the fund was forced to sell most of its stocks to Citadel, the investment firm owned by billionaire Ken Griffin, is potent.
The Financial Times reported:
The trader dubbed the “Nostradamus of AI” would have been hard-pressed to foresee how quickly his high-flying hedge fund would run into trouble.
The firm’s rapid downward spiral is a familiar tale, as Silicon Valley and Wall Street once again threw their weight behind a bright-eyed but untested investor who promised this time would be different. “Everybody always wants to find the next golden child,” said one longtime hedge fund executive. “It just keeps happening.”
Bloomberg reported:
In less than 24 hours — which included a conversation between Griffin and Aschenbrenner — Griffin’s Citadel hedge fund reached out to Situational Awareness and snapped up the investments at a discount, according to a person familiar with the matter who asked not to be identified citing private information.
It was a startling reversal for Aschenbrenner, a former researcher at OpenAI who – before starting his hedge fund roughly two years ago — had no previous investment experience. His fledging firm has watched its assets plunge from $45bn at the start of July to about $10bn.
Incredibly, Aschenbrenner is reportedly due to marry his fiancee, the chief of staff to the chief executive at AI company Anthropic, at a venue in California’s Carmel Valley.
The Wall Street Journal reported that Situational Awareness has lost about 67% so far in July, but is still up about 80% on the year.
Kalyeena Makortoff
Another group of bankers will be looking forward to a bump in bonuses this year, after NatWest group grew the payout pool after a near 30% surge in quarterly profits.
The high street lender said pre-tax profit jumped 29% to £2.3bn between April and June compared with the same period last year, after a jump in customer deposits, mortgage lending, and better economic conditions reduced the prospect of soured loans.
It meant the bank was able to put aside more cash towards its year-end bonus pool for bankers, which is now worth £296m, a 10% increase from the same period last year.
That suggests NatWest bosses may be more generous to their high-performing bankers when they make final pay decisions early in the new year.
Banking rival Barclays also this week revealed a 30% increase in its half-year bonus pool after a rise in profits, prompting fresh calls for a tax on banks.
The Trades Union Congress (TUC) had been leading the charge in recent weeks, arguing that prime minister Andy Burnham’s plans to tackle the cost of living crisis required “more support in the months ahead”, particularly from big banks.
NatWest CEO Paul Thwaite acknowledged boost to the bonus pool, but cautioned against bank tax hike saying studies had shown this would increase loan costs for consumers.
Thwaite also reiterated his argument that “if you want strong economies, you need strong banks” adding:
We’re the biggest lender to infrastructure. We have the biggest SME bank. It’s important that we play our part and help get growth in every nation and the region of the UK. And that’s how I’d want to use the bank’s capital.
The all-time record high for UK petrol prices came on 3 July 2022, according to the AA. That was caused by Russia’s full-scale invasion of Ukraine in a global market already struggling with the bounceback from the coronavirus pandemic.
That peak was 191.53p, the AA said. Prices this weekend will remain well short of that, after reaching 159.5p on Thursday. But the size of the increases underscores how Donald Trump’s war has hit the global market for fuel.
The following chart (which uses different data) shows the size of the impact from the Middle East conflict relative to previous rises. Donald Trump’s Iran war is only rivalled by Vladimir Putin’s war on Ukraine for its impact on UK petrol prices in the last four decades.
UK petrol prices expected to rise to highest level this year
Petrol prices in the UK are expected to rise to their highest level so far this year this weekend after Donald Trump restarted attacks on Iran, adding to pressure on household finances.
The AA, a motoring services company, said that average UK petrol prices had risen to 159.5p a litre on Thursday, having gone up more than 3p this week.
The previous peak for the year came at the end of May with an average of 159.7p per litre. That would be just short of the previous peak on 31 November 2022, when petrol averaged 159.9p a litre.
Prices had declined after the US reached a memorandum of understanding in mid-June with Iran which appeared to be a precursor to peace talks. Yet Trump has in recent weeks appeared to tire of the peace efforts, and the US has struck Iran several times in recent days, prompting retaliation against America’s allies in the Middle East.
Trump appears to be ignoring the political damage from higher pump prices in the US ahead of the mid-term elections in November. The rest of the world’s drivers do not have much way of showing their dissatisfaction with rising prices (unless they have electric cars which are much more insulated from the increases).
Diesel prices were 178.2p yesterday, although that was well short of the 192.4p high for this year in mid April.
The AA said it expected 20.5m UK drivers to the road in the third week of the holiday season.
Luke Bosdet, AA spokesperson on pump prices, said that fuel prices appeared to be following wholesale prices more closely since May, when the government introduced a new “Fuel Finder” service that forces all petrol stations to report prices publicly.
Fuel sellers are often accused of “rocket and feather” behaviour: prices rocket when costs rise, but when costs fall back again prices float down like a feather.
Bosdet said:
The intriguing aspect of current pump prices is that, in early May when wholesale costs shot up 3p to 6p for more than a fortnight, average petrol prices put on less than 2p. Fuel Finder compliance started to be enforced at the beginning of the month and that likely had an impact.
When costs plummeted from late May onwards, pump prices followed rapidly which was unlike previous years of ‘rocket and feather’ pump pricing.
Oil and wholesale costs will fall again at some stage, likely because of a new US-Iran ceasefire. The AA will then be watching to see if the recent fuel trade behaviour repeats itself with another swift drop or whether fuel stations think they have figured out how to deal with Fuel Finder and revert to their old practices.
Sainsbury’s to sell Argos for £120m a decade after £1bn purchase
Another of the top risers on the FTSE 100 this morning is Sainsbury’s. The supermarket chain is up 4% after it said it had agreed the £120m sale of catalogue shopping business Argos to a trio of retail veterans – a decade after buying the company for more than £1bn.
Sainsbury’s said it would be able to fully focus on its core food business and “creating a simpler business with higher margins, higher growth and stronger free cash flow generation”.
The supermarket bought Argos as part of Home Retail Group in 2016, but its hopes to take on Amazon and John Lewis have foundered. Sainsbury’s boss Simon Roberts decided to about turn when he took over in 2020, focusing on food, which has much higher barriers to entry for Amazon or other Chinese players because of the cold chain logistics required to keep food fresh.
Sainsbury’s had considered a Chinese buyer for Argos a year ago.
The supermarket said it had reached long-term commercial agreements with Argos, including rental income for Argos stores inside Sainsbury’s and income relating to the Nectar360 and Nectar loyalty schemes.
The buyer will be Swift Partners, new company established for the deal by former Co-operative supermarket chief executive Richard Pennycook, former Morrisons executive Trevor Strain and banker Matt Truman.
Pennycook said:
What attracted us to Argos is the strength of the business, with a trusted brand, loyal customers and dedicated colleagues. We believe strongly in Argos’s future and see real opportunities to invest and build on its progress.
Argos’s combination – of a strong digital business supported by standalone stores, stores inside Sainsbury’s and local fulfilment centres – gives it a distinctive position in the market and an excellent platform for growth.
FTSE 100 hits latest record high
The FTSE 100 has gained 0.7% in the first half hour of trading, which means… drum roll… its latest record high.
The new high-water mark is 10,981.83 this morning. We shall see if the index can reach the “psychologically important” (i.e., meaningless) 11,000 mark today.
Up there among the winners this morning is NatWest Group. The bank is up 3.6% after upgrading its financial outlook and share buyback plans after revealing a jump in profits. The Polar Capital investment trust, which has exposure to AI companies, is the top gainer, up 4.3%.
Those chemical leak costs and paused share buyback have put Melrose Industries at the bottom of the index this morning.
Melrose shares are down 6.3%, making it the biggest faller on London’s blue-chip index. Spreadbetting platform IG Group is down 5% after publishing financial results and revealing a plan to buy US fantasy sports business Underdog.
Aerospace company Melrose Industries has paused its share buybacks as it waits for potential legal and regulatory action over a leaking chemical tank in California.
The company’s GKN Aerospace business said the tank at its Garden Grove facility was leaking methyl methacrylate, a flammable chemical used in the acrylic for windows for the F-35 fighter jet and passenger cabin windows on commercial aircraft, because it was overheating. The local area had to be evacuated in case the tank exploded (which it did not).
Melrose on Friday said the was “back to partial production” after the chemical tank incident at the end of May, and that it was “working closely with relevant authorities and customers to safely resume full production”.
However, the company paused its £175m share buyback, “pending clarification of financial impact of the Garden Grove incident, including from ongoing regulatory and legal processes”.
Peter Dilnot, chief executive of Melrose Industries, said:
We are managing the situation at our Garden Grove transparencies site following the incident in May. Partial production has since resumed, and we will continue to work closely with customers, regulators and other authorities to safely restore the site to full production in the second half.
The incident has already cost the company £16m in lost revenues, plus another £13m in exceptional costs. It will have another £25m to £30m in costs in the second half of the year.
UK house prices edge up in July amid interest rate caution
Joanna Partridge
Economic uncertainty dampened UK house price growth in July as prospective house buyers remained cautious about interest rates amid the ongoing US war with Iran in what should be peak housebuying season.
House prices rose by just 0.1% in July from a month earlier, according to lender Nationwide, while annual price growth slowed to 1.8% this month, down from 2.2% in June.
The UK’s biggest building society said the price of an average home edged slightly higher in July to £277,542, up from £277,484 the previous month. However, this is still lower than the average price recorded in May, when it rose above £278,000.
Robert Gardner, chief economist at Nationwide, said:
Market activity and house prices have remained soft in recent months, in part reflecting the uncertain economic backdrop. Geopolitical tensions remain high, with the conflict between Iran and the US again exerting upward pressure on energy prices and market interest rates in recent weeks.
Financial market expectations for the future path of Bank Rate have been volatile, reflecting shifting views about the inflationary implications of events at home and abroad.
British Airways owner’s profits fall as Iran war pushes up fuel costs
The owner of British Airways has reported a steep fall in profits and said it expects no growth in passenger capacity this year as the US-Israeli war in Iran takes its toll.
International Airlines Group (IAG) said it expected demand to stay strong, but added that its “disciplined cost control” could only partly mitigate the impact of “a significant fuel price increase” caused by the attacks on Iran. Iran closed the strait of Hormuz in response to the attacks, a key export route for oil from the Gulf.
The company, which also owns Iberia and Aer Lingus, among others, said that it was a “resilient revenue performance despite lower capacity than planned”.
Revenue increased in the first half of 2026 by 1% to €16bn, while profit after tax fell 21% to €1bn.
Luis Gallego, IAG’s chief executive, said:
With these results IAG has again demonstrated that its excellent fundamentals are supporting continued value creation for our shareholders, despite the impact of the crisis in the Middle East and wider geopolitical events.
BP to sell North Sea business; Korea’s stock market rises a record 18%
Good morning, and welcome to our live coverage of business, economics and financial markets.
BP has put its North Sea oil business up for sale, saying it will try to find a buyer amid a political dispute over whether the UK government should allow more drilling.
Prime minister Andy Burnham on Thursday signalled that he would be open to more extraction in the North Sea, although he did not make clear if that would mean new licences or allowing expanded use of existing wells.
BP, one of the biggest companies on the FTSE 100, said it was selling the North Sea business as part of an ongoing portfolio review under American chief executive Meg O’Neill. The American was appointed in December with a remit to refocus the company after a tumultuous period of three chief executives in three years.
The company said it wanted to direct the spending required on the North Sea to other places which could offer higher financial returns.
O’Neill said:
The UK has been our home for more than 100 years and will continue to play an important role in our future. We’re proud of the jobs we create, the contribution we make to the UK economy, and the work we do to keep energy flowing every day.
The North Sea remains integral to the UK’s energy system. However, as we focus our portfolio and direct capital to our highest-value opportunities, we believe our North Sea business will be better positioned as part of another company. It has world-class people, resilient assets and a proud heritage, and it is precisely these qualities that can attract an owner ready to back its next chapter. We are seeking an outcome that recognises that value.
The question of whether to allow more North Sea drilling has become politically contentious in recent months. Environmental campaigners are aghast that Labour is considering allowing more drilling for planet-heating fossil fuels, but Burnham appears to have decided it would be more useful to drill at a time of high energy prices.
Donald Trump revealed Burnham’s plans after a first phone call between the US president and the new prime minister. Burnham later told reporters:
I indicated in the phone call that we had, a week last Monday, that I would take a pragmatic approach when it comes to the North Sea, and that is my intention as we go forward from here.
There is a resource there. When people are struggling, we can’t ignore that. Hence, me indicating that to the president.
Record day for Korea’s stock market
South Korea’s stock market has been going through a period of turbulence for the ages thanks to the AI boom – and fears it will bust. It continued on Friday, with the largest single-day increase in the benchmark Kospi index’s history.
Korea’s Kospi is up an astonishing 17.91% today. It fell 11% on Tuesday – just shy of the record 12.06% decline hit in early March in the first days of the Iran war – and 6% on Wednesday.
Global stock markets have been dominated in recent months by artificial intelligence companies. But Korea’s stock market does not have the depth of the US, meaning its AI-exposed chip companies are even more dominant. The share price of chipmaker SK Hynix soared 30% on Friday, while Samsung Electronics was up 28%.
Over the last 12 months the index is up 104%, but over the last one month it is down 20%. In this wild week it has dropped a mere 1.1% – all that sound and fury, signifying nearly nothing. These are not normal moves.
Sergi Lanau, director of emerging markets strategy at Oxford Economics, said that “We believe sentiment is still frothy in Korea”, citing the size of assets in leveraged exchange-traded funds (ETFs), which use debt to pump up returns. He said:
Although we believe the AI buildout still has legs, we expect burned leveraged traders in Korea to continue to exit the market, keeping it under pressure. That’s sufficient reason to lower our weight on the broader emerging market complex to neutral.
Korea’s authorities have this week sought to tighten restrictions on leveraged ETFs, although given the wild swings some investors will already be ruing the day they bought them.
