Motoring group the RAC is wasting no time in jumping on the falling oil price to urge retailers to slash prices at the pumps.
The price of oil has dipped lately on fears of a global slowdown in demand and an uptick in supply from the likes of Iran and Saudi Arabia.
A barrel of Brent crude oil ended both Monday and last Friday under $45 – the first time it has dropped to this point since early May.
However yesterday oil pushed away from its two-month low. Brent crude, the global benchmark, jumped almost two per cent to $47.46 per barrel.
Meanwhile, West Texas Intermediate crude, the US benchmark, swelled 1.5 per cent to $45.81.
Traders reported that the rebound was due to difficulties loading oil onto tankers at two export terminals in Iraq’s south following a pipeline leak.
Demand issues remain though and yesterday oil cartel Opec downgraded its global demand growth forecast in 2017 to three per cent from a likely 3.1 pre cent this year, while growth in the eurozone could slow to 1.2 per cent from 1.5 per cent in 2016, which it blamed on the effects of the UK’s vote to quit the European Union.
According to the RAC the price of oil is currently the biggest factor affecting the price UK drivers pay at the pumps.
The falling oil price has had the effect of pushing down wholesale fuel prices, and to a large extent has cancelled out the impact of the declining value of sterling, RAC Fuel Watch data shows.
Since the day it was announced Britain had voted to leave the European Union on 24 June, the wholesale price of unleaded including VAT has fallen 2.84p to 104.65p, yet the average price on forecourts has risen by 0.54p to 112.29p.
The diesel price meanwhile has remained largely static, falling 0.26p on wholesale markets to 106.42p, and rising 0.73p to 112.72p at the pumps.
“Despite some fears that petrol prices could shoot up as a result of the EU referendum, we believe there is now a strong case for a cut in the price of unleaded on UK forecourts,” said RAC spokesman Pete Williams.
“The fact remains that the headline oil price has a huge bearing on what we pay for fuel at the pumps.”