April was a varied month regarding the price of petrol and diesel, and experts are already predicting that May could see more changes ahead. The possible merger of Asda and Sainsbury’s supermarkets could play a part in price changes for May as the combined supermarket group would automatically become the largest petrol retailer by volume of fuel sold, so would also have an immense influence on the cost of fuel in Britain.

Average prices in April

The average price for unleaded in April rose from 119.8 pence per litre in March to 121.4 pence per litre in April. The rise in diesel was less significant, increasing from 122.6 pence per litre in March to 124.1 pence per litre in April. For unleaded drivers, the increase came at both ends of the month – the first week saw it creep up to 121p then again in the third week, by another 2p on the average price. Diesel drivers saw a steady growth throughout the month, increasing by 1p each week.

The reason for these increases was the price of Brent Crude oil, which saw steady growth during the month. On the 2nd of April, the price was $67.64 a barrel and rose to $68,65 on the 9th and again to $71.42 on the 16th. It saw another increase jumping to $74.01 on the 23rd but dropped back down by the end of the month, finishing on $73.12.

Following the trend

In the middle of the month, experts were already predicting that the price at the pump would increase, which it did for both petrol and diesel. They predicted around 3p a litre for both which proved to be an accurate assessment – both ended the month approximately 3p a litre higher than they began.

The price in the middle of the month for crude oil reached the highest figure since November 2014 when it jumped to $75.20 a barrel. It came at the end of a six-day rally where prices kept rising and saw an increase of more than 20% since prices initially dropped in February.

Finally, at the end of the month, the price fell a little despite supply concerns regarding the US imposing sanctions on Iran. It led to the price ending the month slightly lower than in the third week although prices at the pump continued to rise right to the end.

What caused the rise?

The cost of Brent Crude oil can be influenced by any number of factors around the world. In the middle of the month, there was a dramatic spike in the price that was connected to the ongoing crisis in Syria and the chemical weapons attack. It caused concerns that there would be a war between the West and Russia in Syria and the price of oil rose accordingly. This rise in oil price has a direct impact, but there is usually a delay of a few weeks between the oil price and the effect of this on the pump price.

Experts are also saying that the price of crude oil could continue to rise into May. April saw a slight drop in the price at the end of the month, but Reuters is predicting that the average price for the whole year will soon be above $67 a barrel. Reuters claims that strong compliance with OPEC-led product cuts and supply disruptions have been big factors in causing this price rise.

However, America may continue to disrupt global oil markets by ignoring OPEC and increasing oil production and supplies as part of their aggressive trade war threats they are currently undertaking with China and the EU.

The month of May will see US president, Donald Trump, decide on the deal with Iran which has been featured a lot in the news. It could even have an impact on the price we pay for fuel. Experts say that if the president pulls out of the deal and sanctions are re-imposed, the cost of oil could rise by $2-3 a barrel. Some are talking about a worst-case scenario of oil passing the $80 a barrel mark.

Closer to home – supermarket merge

Another big story this week that could affect our future fuel prices is the proposed merger between supermarket giants Asda and Sainsbury’s. The deal is still in the early stages, and the Competition and Markets Authority will look at the merger from many perspectives.

For UK drivers, one of the leading concerns is the lack of competition. Supermarkets usually top the list for the cheapest places to buy fuel, and the merger could see the new company have 600 forecourts across the UK. Currently, Asda has a price promise where they will always be the cheapest fuel station within three miles – but Sainsbury’s have no such guarantee.

So, will the merger see Sainsbury’s adopt this policy? Or will it see Asda abandon it? Retail experts say that the new merger company should have lower supply chain costs so, therefore, the price of everything from a litre of fuel to a carton of milk should go down. But, will this be the reality as the new company wants to maximise profits?

Other concerns will be around the fuels offered. Will both forecourts provide the same products or will they remain with their own branded fuels? Will the quality of products change? The deal is one that has a lot of questions that need to be answered before UK drivers can feel comfortable about it.

Did you notice your fuel bill increasing in April? And do you regularly use Asda or Sainsbury’s for your fuel and do you think the merger is going to mean cheaper fuel prices? Let us know in the comments

Would love your thoughts, please comment.x