The PRA has rejected suggestions that fuel prices will start to rise again as a result of a deal between the world’s two biggest oil exporters, Saudia Arabia and Russia.

Yesterday (Tuesday 16 February) ministers from the two countries agreed to freeze the output of oil at current levels, in a deal that also requires other big producers to cap their output.

PRA chairman Brian Madderson said: “In order for prices to start to rise we need to see a cut in output, not just a freeze by the big two, and a cut by other OPEC members such as Iran and Iraq.

“There is a massive overhang of stock – as was pointed out at International Petroleum Week – which will take some time to work through. A freeze is not going to affect that overhang, so there needs to be a cut if they are going to address that.”

Madderson warned that, if there were a price rise, it was far more likely to be as a result of the Chancellor raising duty in his Budget on March 16.

He explained: “The Chancellor has lost tax revenue as a result of a lower take of VAT due to pump prices reducing from around 140ppl down to the 100ppl level.

“He may argue that to make up for that loss of VAT he will have to put up duty, and to appease the objectors he may say the duty rise will be reviewed so that if prices rise, and VAT take goes up, the duty rise could be reversed.”