Petrol prices at supermarkets could fall by 7p-8p to £1.10 a litre if the dramatic fall in the price of crude oil is sustained over several weeks, the AA has predicted.
Monday’s 23% decline to less than $35 a barrel could save a family with two cars about £15.50 a month, the motoring group said.
Last month there was one of the largest drops in fuel prices in the past 20 years. Wholesale oil was trading at close to $60 a barrel as recently as 21 February.
The decline in demand because of coronavirus and the row between Russia and Saudi Arabia resulted in the latest collapse in prices. Saudi Arabia slashed the cost of oil at the weekend after it failed to convince Russia on Friday to back sharp production cuts.
The two countries had previously worked together on production curbs, which kept prices higher.
Oil prices on Monday morning opened 30% lower, although by lunchtime they had regained some ground to be 23% down.
“The spat between oil producers echoes the oil price crash in 2015, when £1-a-litre fuel returned to UK petrol stations,” said Luke Bosdet, the AA’s fuel price spokesman.
“There is still a long way to go and the chances of another major collapse in forecourt prices will depend on how long the oil price plunge continues and how quickly UK retailers take to pass on savings.”
The RAC’s fuel spokesman, Simon Williams, said: “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.”
Williams has urged the new chancellor, Rishi Sunak, to resist calls to increase fuel duty in Wednesday’s budget. Currently about 58p of duty is added to the wholesale costs of providing each litre of fuel, with VAT added to that total.
“We strongly hope he does not see this an opportunity to hike fuel duty, given the currently volatility of the oil market,” Williams said.