Introduction: UK diesel prices record biggest monthly drop on record, RAC says Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. The plummeting oil price has lead to widespread price reductions for motorists filling up their fuel tanks in the UK in June. The average price of diesel fell nearly 17p a litre in June, the RAC reports this morning, which is the biggest fall in a single month since 2000.

During June, diesel fell from 183.75p a litre at the start of the month to 167.14p a litre by its end, a drop of 16.6p. That followed sharp falls in the crude oil price – which slumped by 20% in June. The average price of petrol fell too, by 8p a litre in June – falling from 159.37p to 151.40p a litre.

RAC head of policy SimonWilliams said: “June has been a far better month for drivers on the back of the announcement of a deal between the US and Iran to end the conflict. The price of oil has fallen dramatically and prices at the pumps have reflected that.” Diesel is nasty stuff, of course – diesel engine exhaust is classed as carcinogenic to humans by the World Health Organisation, while the Dieselgate scandal is estimated to have killed about 16,000 people in the UK and caused 30,000 cases of asthma in children. But, swathes of the UK economy run on the stuff – diesel’s used by long-haul trucks in the commercial freight and logistics world, for buses and coaches, and for passenger cars (although sales have been falling in recent years).

So, cheaper diesel should ease the cost pressures buffeting UK households and businesses. Crude oil is trading at $70.70 today, cheaper than just before the Iran war started. Diesel and petrol price, though, are still higher than before the conflict began.

Williams explains: “At the time the conflict began drivers had average prices of 132p for unleaded and 142p for diesel, so we’re still some way off those levels. “As things stand, petrol should dip under 150p soon and diesel ought to get to below 160p but we would need the price of oil to fall further to see a return to the pre-conflict prices.” The agenda 9.30am BST: BoE credit conditions survey 1.30pm BST: US non-farm payrolls jobs report for June Investment bank Shore Capital suspect the fall in the oil price may have gone too far. Brent crude has dropped from around $110 a barrel in mid-May to below $71 a barrel today – Shore analyst James Hosie reckons it may rise back over $80 a barrel once the boost from reopening the strait of Hormuz ends.

In a research note titled They think it’s oil over, Hosie writes: Rapid decline to low $70s may be an over-correction - Near term oil prices have declined by over 15% following the mid-June US-Iran ceasefire agreement that has enabled the gradual resumption of transit through the Strait of Hormuz and reduced the threat of a fresh escalation in the military conflict. In our view, the sharp drop in oil prices has been driven by the release of oil tankers previously stuck in the Gulf back onto the global market, including Iranian cargoes that are currently sanction free. As this initial supply boost passes, we anticipate a rise in Brent prices back above $80 per barrel based on a gradual recovery of Persian Gulf oil production.