Supermarkets have begun cutting their fuel prices, prompting hopes of a price war that could benefit millions of motorists.
Reacting to a plunge in wholesale oil prices, Asda was the first to announce it is cutting 2p per litre from petrol and diesel at all of its filling stations. That means drivers will pay no more than 114.7p per litre for unleaded and 116.7p a litre for diesel at its forecourts.
In recent weeks the other major supermarket fuel retailers - Sainsbury’s, Morrisons and Tesco - have responded quickly to mirror a series of reductions by Asda and this is the chain’s fourth round of price cuts in response to changes in oil prices.
The start of this week saw the biggest drop in wholesale oil prices since the first Gulf War, prompting hope of even greater reductions at the pumps.
Oil prices have been hit by a fall in demand caused by the coronavirus. Talks to limit the global supply in order to prop up prices collapsed on Friday and Saudi Arabia reacted by cutting its prices and announcing plans to ramp up production. That led to a 20 per cent fall in the value of oil by Monday morning.
While the latest forecourt reductions have been welcomed, the RAC has said there is scope for retailers to go even further and offer drivers savings of up to 10ppl over the coming weeks.
Need for far deeper cuts
RAC fuel spokesman Simon Williams said: “After such a sharp drop in the price of oil it’s right that pump prices start falling, and quickly. We hope other retailers large and small follow Asda’s lead by trimming their prices and delivering good value to UK drivers.
“But despite these headline-grabbing price reductions, it remains the case that the wholesale price of both petrol and diesel has fallen so far that we really should be seeing far deeper cuts at the pumps. Even with today’s cuts, we believe there is scope for a further 7p to 8p to come off the price of both fuels over the next fortnight – so we will be keeping a close eye on what the supermarkets do in the coming days.
“The market is awash with oil, with the fall in demand brought about by the coronavirus outbreak and new tensions between Saudi Arabia and Russia. Collaboration between Russia and OPEC, of which Saudi Arabia is a key member, on the quantities of oil produced had helped to prop up the oil price in the last few years, but with the apparent end of their pact it is difficult to see oil prices rising very much in the next few weeks.
“Clearly, with all the current volatility this is no time for the Chancellor to consider a hike in fuel duty at tomorrow’s Budget.”