Plunging oil price could see ‘serious’ pump price cuts in days
Today’s 30% fall in oil prices – the biggest single daily drop in the oil price in 20 years – should bring some “swift and significant cuts” at the fuel pumps.
Brent crude futures fell by 31% to $31.02 Monday morning, marking the worst one-day fall since the start of the first Gulf war in 1991. The plunging oil price was the result of a price war between OPEC, Russia and the US following failed OPEC plans to slash production and support the market.
RAC fuel spokesman Simon Williams said: “The last time we saw the wholesale price of petrol this low was in March 2016 which led to an average price of 106p a litre two weeks later. That’s nearly 17p a litre below the current average of 122.85p. The diesel wholesale price was last this low in September 2016 which yielded a price of 113p a litre – 12.5p below its current UK average of 125.59p. It might be a bit too much to think we will see these prices again based on a one-day drop in the oil price but we ought to see at least 10p a litre coming off the price of unleaded in the next fortnight which would produce an average of 113p – a price last seen in October 2016.
“Having said that, much will depend on what the chancellor does in his Budget on Wednesday and we strongly hope he does not see this an opportunity to hike fuel duty given the currently volatility of the oil market.
“We strongly urge every fuel retailer – large and small – to pass on these savings as soon as possible. But we expect the big supermarkets who sell the lion’s share of fuel to lead the way with some swift and significant cuts in the next few days.”
He added: “Ironically, the latest oil price collapse has been brought on by OPEC and its allies, principally Russia, failing to agree another round of production cuts to prop up the barrel price in the wake of the slump caused by the coronavirus impacting global demand. Russia appears to want to keep the price of oil low to hurt the US’s shale oil production, while Saudi Arabia seems to want to make a point to Russia that it can withstand an even lower oil price as its cost of production is the lowest in the world.”