Coach companies have warned that record diesel costs could lead to reductions in services, including school transport, while haulage businesses say escalating fuel bills are forcing hundreds of operators to close.

The average cost of diesel at UK filling stations climbed above £2 a litre last week, setting a new high as the conflict in the Middle East continues to affect worldwide fuel supplies.

Alison Edwards, policy director at the Confederation of Passenger Transport (CPT), said fuel expenses had “risen sharply this year to levels that cannot be sustained, placing already narrow coach operator margins under severe pressure”.

“Urgent action is needed,” she said. “Without support, higher prices will force hard choices over the provision of services, including transport between home and school, as well as the survival of businesses.”

Edwards said that 85% of independent coach operators were family-run firms and urged the government to introduce temporary help with diesel costs, saying the sector “requires assistance”.

Bus operators in England already receive support with fuel through subsidies intended to meet operating expenses. Coach firms say they provide a comparable public service but have not been offered similar aid.

Richard Smith, managing director of the Road Haulage Association (RHA), said freight operators were facing many of the same difficulties. “Companies in our industry usually work on very limited margins, often around 2%, so persistently high fuel prices create an enormous problem,” he said.

He said hauliers were now spending roughly £350 more each week on every lorry than before the Iran war. “That simply cannot continue,” he said. “When haulage, coach and van businesses cannot recover these costs from customers, they come under intense pressure, and hundreds of transport companies have already failed this year.”

Haulage companies are seeking a halt to proposed fuel duty increases as well as a rebate to reduce the burden of diesel prices. The RAC has urged ministers to widen the existing 5p fuel duty reduction, which has been prolonged until the end of the year.

Rhys Hackling, managing director of Direct Connect Logistics, said the consequences for his company had been “extremely significant”.

The business operates 22 lorries from bases in Oxfordshire, Northamptonshire and Warrington, moving everything from supermarket supplies to equipment for live events. He said fuel spending had risen considerably from last year: “We would usually spend around £50,000 a month on fuel … now it is approaching £65,000.”

Many hauliers are tied into fixed-price customer contracts, Hackling said, which means fuel increases can drastically reduce or completely remove any profit. “If this situation continues, it will put a large number of haulage companies out of business,” he said.

“Confidence in the market is lower, meaning there are fewer available jobs, and work can disappear very quickly. Ultimately, someone has to absorb the cost, whether that is the haulage business or the consumer.”

There was some indication that fuel costs could eventually fall after G7 leaders said on Friday that they would release up to 100m barrels from emergency stocks of diesel and crude oil.

The decision came partly after Donald Trump suggested he could impose restrictions on diesel exports, following stronger overseas demand that had driven US prices to record levels.

The proposal now appears less likely to go ahead. Such a restriction could have increased UK diesel costs further, as Britain obtains about a third of its diesel imports from the US and lacks sufficient domestic refining capacity to satisfy demand.

Transport minister Keir Mather said the UK’s fuel system was “fundamentally resilient” and that the public “should not be worried about shortages”.