Rachel Reeves is poised to drop plans to hike fuel duty as Brits brace for more 'Trumpflation' pain.
The Chancellor could announce as soon as Thursday that the increase slated for September is not happening.
Pressure has been mounting on the Government to say how it will help families with the looming impact from the Middle East crisis.
Brent Crude has surged again to around $110 a barrel after Donald Trump renewed his threats against Iran.
The Strait of Hormuz - through which around a fifth of global oil supplies normally pass - remains effectively shut.
The RAC said the average petrol price had crept up to 158.24p today, with diesel 186.15p.
The levels are expected to reach new highs since the crisis erupted later this week, as oil costs are fed through to drivers.
Chancellor Rachel Reeves could announce as soon as Thursday that the increase slated for September is not happening
The Treasury declined to comment on speculation about the announcement.
Ms Reeves was in Paris today for meetings with G7 counterparts, as the IMF upgraded dismal forecasts for the UK economy - but warned of an inflation spike.
The Chancellor was pictured standing some distance from US Treasury Secretary Scott Bessent, with whom she had a bruising confrontation in Washington recently.
Ministers have been stressing they are focused on the cost of living timebomb despite Labour descending deeper into civil war.
A crucial Commons by-election battle has officially kicked off with Andy Burnham's allies accusing rivals of sabotage.
Supporters of the Greater Manchester mayor lashed out after leadership contender Wes Streeting voiced support for rejoining the EU.
That highlighted Mr Burnham's own strident views on reversing Brexit – seen as deeply unhelpful when he is wrestling Reform in the Eurosceptic seat of Makerfield. Victory would be a springboard to taking over from Keir Starmer.
The spat came amid rising anxiety in Labour ranks at the consequences if the contest – likely to be on June 18 – is lost.
Even fans of Mr Burnham say his chances of success could be worse than 50-50, with polls having consistently shown Nigel Farage's outfit on track to win.
Sir Keir visited Labour HQ this morning to thank staff for their hard work, insisting he would 'get on with the job'. He pledged to support whatever candidate is fighting Reform at the by-election.
Deputy PM David Lammy acknowledged that the 'internecine warfare' after disastrous local elections was a 'spectacular own goal'.
'Some colleagues are lighting the match and standing in the petrol,' he warned, hinting that a general election could be inevitable if the party does not pull together.
But Mr Lammy refused five times to say whether he personally wanted to rejoin the EU.
Ms Reeves was in Paris today for meetings with G7 counterparts, as the IMF upgraded dismal forecasts for the UK economy - but warned of an inflation spike
Backbencher Jonathan Hinder said the call to unwind Brexit showed a 'staggering level of out of touch'.
One despairing minister told the Daily Mail: 'Day one has gone well but it'll be downhill from here on in.'
Another senior Labour source said the complaint amounted to 'Wes is doing politics and I'm upset about it'. 'Welcome to Westminster, Andy. It's not all free money and buses with bees on,' they added.
A former minister said: 'Burnham has the political sense of a gnat.'
Despite the race to replace him being in full swing, Sir Keir is not expected to concede he will have to quit or set out a timetable. Instead, the premier will wait to see whether Mr Burnham can get back into the Commons.