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Rachel Reeves today told petrol bosses they had a 'shared obligation' to keep prices down for British motorists after crisis talks almost collapsed.
The Chancellor hosted industry chiefs in 11 Downing Street on Friday amid growing fears about the impact of the Iran war on household finances.
The RAC said the average price for a litre of unleaded had risen by 8p since the start of the conflict, with the cost now its highest for 18 months.
Friday's meeting almost didn't take place after the Petrol Retailers Association (PRA) threatened to pull out of the talks with Ms Reeves and Energy Secretary Ed Miliband.
It claimed the Government's 'inflammatory language' over fuel prices - in which ministers waned against 'price gouging' - had led to abuse of forecourt staff.
At the meeting, Ms Reeves thanked the petrol bosses for their co-operation, but told them she wanted an 'open and frank conversation' with them.
'We have concerns around the high prices and we do have a shared obligation,' she said.
Mr Miliband warned bosses from forecourt operators and firms including Asda, BP, ExxonMobil and Shell that the Government would not tolerate 'unfair practices'.
Rachel Reeves today told petrol bosses they had a 'shared obligation' to keep prices down for British motorists after crisis talks almost collapsed.
The Chancellor hosted industry chiefs in 11 Downing Street on Friday amid growing fears about the impact of the Iran war on household finances
'We have said so clearly that we won't tolerate unfair practices either here or anywhere else in the industry,' the Energy Secretary said.
'It is out obligation as the Government to ensure the consumers are treated fairly in this crisis.'
The average price of diesel reached 159.2p on Friday, while petrol hit an 18-month high of 140.6p per litre.
It came as oil surged back over the grim mark of $100 a barrel, with fears the Iran conflict will lead to higher energy prices and drive inflation for families in the UK.
Since the outbreak of war in the Middle East between Iran and the US and Israel, the Iran has 'closed' the Strait of Hormuz, a vital shipping lane through which around a fifth of all global oil and liquid gas travels.
Iran has threatened all vessels passing through the strait and conducted a series of drone strikes on tankers, with six assaults in the last 24 hours, according to UK Maritime Trade Operations centre.
As of Friday morning, Iran had attacked 18 ships in the region.
Before the talks in Downing Street, Gordon Balmer of the PRA raised concerns that recent language from the Government was driving abuse against fuel retail staff by members of the public.
He said this followed 'several days in which ministers have suggested that forecourts may be 'price gouging' and 'ripping off' the motorist'.
The PRA later said it would take part in the meeting after assurances from the Treasury that it would be held largely in private, which the group said would 'allow a conversation to explain how the fuel market works'.
Following the talks, Mr Balmer said it had been 'constructive', but there had been no apology for the 'inflammatory language' from ministers.
He said: 'The meeting went very well. We engaged in constructive discussion with the Government on this and we are working collaboratively with them.'
Although the Chancellor has said she will not stand by while motorists are left paying 'over the odds' to fill up, she is still resisting demands to drop an increase in fuel duty planned for September - which could heap more pain on drivers.
Motorists queue for fuel on the forecourt of a filling station at Costco in Liverpool, amid rising prices
She has already asked the Competition and Markets Authority (CMA) to crack down on extortionate prices amid concerns of profiteering in the industry.
It comes amid reports of forecourt prices varying wildly across the country, with one petrol station in Chelsea, London, reportedly selling petrol for as much as 238.7p per litre on Thursday.
Diesel at the Gulf premises was being sold for 264.9p per litre, the Standard reported.
Ahead of Friday's meeting, Reeves said: 'I will not tolerate any company exploiting the current situation to make excess profits at consumers' expense. I'm backing drivers and families – and I expect a fair deal at the pump.'
But the Petrol Retailers Association (PRA), which represents hundreds of filling stations across the UK, threatened to withdraw from the talks after requesting for it to be held in private without media present - which it claims was rejected by the Chancellor's office.
Mr Balmer said: 'Recently, I have heard of incidents from some of our members of retail staff being abused by members of the public, who may have been provoked by the incorrect and inflammatory language emanating from some commentators.
'Our members are working hard in difficult circumstances making sure that motorists and businesses are getting the fuel they need, at prices that are very competitive, on razor thin or in some cases negative margins which means they are losing money.
'Our job is to serve the public keeping motorists and businesses on the road.'
According to the RAC, since the outbreak of conflict two weeks ago, petrol prices in Britain have risen by almost 8p a litre (a 5.8 per cent jump), with diesel up 16.8p - or 11.8 per cent.
'The fact the cost of a barrel of oil has exceeded $100 and wholesale fuel prices continue to rise is concerning, but it's the speed at which drivers are feeling the effects which is under the spotlight now,' said Simon Williams, its fuel price spokesman.
'Drivers deserve - and should expect - to be treated fairly when it comes to filling up, especially with pump prices still heading north.'
Around the world price hikes are even more severe, with the cost of diesel up 44 per cent in Germany, figures showed this week.
Juliette Enser, the CMA's Executive Director for Markets, said: 'Whilst price increases might be inevitable because of rising wholesale costs, it is important that those increases reflect genuine cost pressures.
'We will be closely scrutinising and reporting on what's happening with fuel prices and call out any concerning behaviour.'
Foreign Secretary Yvette Cooper on Friday said Iran and Russia are working together in an attempt to 'hijack the global economy' amid rising oil costs.
Speaking during a visit to Saudi Arabia, the Foreign Secretary linked the threat from Iran to that from Russia, a key ally of Tehran.
She said: 'We have seen these links between Russia and Iran over an extended period of time.
'We're seeing it in terms of technology, we see it in terms of the approach, we see it in terms of these kinds of tactics, and we see it in terms of the way these two states try to support each other and try to benefit together from attempting to hijack the global economy.'
She added: 'We are very clear about the threat from both Russia and from Iran to the global economy and to all of our wellbeing.'
The US this week announced a temporary waiver lifting restrictions on the purchase of Russian oil and petrol already at sea in a bid to tackle rising prices.
But UK Energy minister Michael Shanks today indicated the UK would not follow suit and warned against doing anything that will help Vladimir Putin's 'war machine' against Ukraine.
Touring broadcast studios this morning, he did not directly criticise the US decision.
But he told Sky News: 'The UK has been really clear that our sanctions on Russia stay in place. And look, this is a moment where I suspect in the Kremlin they are looking at this as an opportunity to fix some of their ailing economy.
'That is a great shame, because we have to do everything that we possibly can to make sure that we are bringing all pressure to bear on Russia so that we can win this war in Ukraine.
'We will keep up our sanctions, and we'll continue to do what we are doing around the shadow fleet, and we're not going to change our position on that at all.
'It's really important that we don't do anything that can assist the Russian war machine right in the middle of a really critical moment in this conflict against Ukraine.'
The price spike at the pumps means the Government is under increasing pressure over plans to hike fuel duty later this year.
The Chancellor previously pledged to phase out a 5p cut to the tax, which was put in place following Russia's invasion of Ukraine, from September.
Fuel fears arose as the UK economy stagnated in January, new figures have shown, recording no growth in GDP - after a 0.1 per cent growth in December.
Most economists had expected growth of 0.2 per cent in January.
Independent fiscal watchdog the Office for Budget Responsibility (OBR) warned earlier this week a sustained spike in energy prices driven by the US-Israel war with Iran could mean UK inflation ends the year one percentage point higher than expected, at close to three per cent.
It had already lowered its growth forecast for this year to 1.1 per cent from 1.4 per cent in the recent spring statement, even before the Iran conflict began.
Ms Reeves said: 'Our economic plan is the right one, but I know there is more to do.
'In an uncertain world, we are building a stronger and more secure economy by cutting the cost of living, cutting national debt and creating the conditions for growth to make all parts of the country better off.'
Reacting to the latest economic figures, Conservative leader Kemi Badenoch accused the Prime Minister of being 'distracted' in a post which did not mention the Iran war.
She said: 'Britain's economy is flatlining, battered by Labour's taxes and regulations.
'Keir Starmer isn't thinking about economic growth, he's too distracted by the Mandelson scandal and clinging on to his own job.
'We need to cut spending, cut taxes and get Britain working again.'
Thomas Pugh, chief economist at RSM UK, said the Middle East crisis raises the spectre of so-called stagflation - a combination of rising inflation and a stagnant economic performance - or even recession if prices keep soaring.
He said: 'If energy prices stay around current levels, another bout of stagflation looks likely, with growth slipping to around 0.5 per cent this year.
'If energy prices move even higher, in a similar way to 2022 a recession looks more likely, given the weaker labour market and tighter starting point for monetary and fiscal policy.'
With growing uncertainty around how the conflict in the Middle East will end, there are fears prices could rise even further.
On Wednesday, a spokesperson for Iran's Revolutionary Guards threatened the cost of oil could reach $200 per barrel before the war is over.
'You will not be able to artificially lower the price of oil. Expect oil at $200 per barrel,' the spokesperson said in a statement.
'The price of oil depends on regional security, and you [the US and Israel] are the main source of insecurity in the region.'
Currently the international standard, Brent crude oil, remains over $100 - around £75 - per barrel, having peaked as high as $120.
The price pressure is also down to attacks on oil infrastructure in the region, with oil fields targeted in addition to military assets and bases.
Energy Secretary Ed Miliband said: 'Tackling the cost of living is our number one priority - all fuel retailers must sign up for Fuel Finder so drivers can find the cheapest price at the pump.
'We will not hesitate to act to protect consumers against any unfair practices.'
Activists placed stickers depicting Donald Trump saying 'I did that' and Nigel Farage saying 'I support that' on a petrol pump in London this week as prices surged
