What does the plunging oil price mean for UK drivers?

Reacting to the sharp drop in the price of oil, RAC 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.

“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.

“Having said that, much will depend on what the Chancellor does in his Budget on Wednesday and we strongly hope he does not see this an opportunity to hike fuel duty given the currently volatility of the oil market.

“We strongly urge every fuel retailer – large and small – to pass on these savings as soon as possible. But we expect the big supermarkets who sell the lion’s share of fuel to lead the way with some swift and significant cuts in the next few days.

“Ironically, the latest oil price collapse has 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, 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.”