Pump prices should start falling - and quickly - claimed the RAC following the news that Asda had cuts its petrol and diesel prices by 2ppl.
Fuel spokesman Simon Williams said: "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.”
“This is looking like the biggest single daily drop in the oil price in 20 years. It should translate to some serious cuts at the pumps, particularly as the price of both petrol and diesel is still overpriced despite two rounds of cuts from the supermarkets last month.
“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.
He said that ironically, the latest oil price collapse had 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," he said. "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.”