Motorists have received a welcome boost this week as the average price of supermarket unleaded has fallen below 150ppl for the first time since 31 March.
The milestone follows a fresh round of price cuts across the major supermarket chains, with competition intensifying as wholesale fuel costs begin to ease.
Morrisons has led the market in recent days, maintaining an average unleaded price below 150ppl for five consecutive days and currently averaging 149.1ppl across its forecourt network. However, Asda responded aggressively with a sharp round of price reductions yesterday, bringing its average unleaded price down to 149.3ppl as they try to reclaiming the position as the cheapest of the big four supermarkets.
The latest reductions mean the average unleaded price across Asda, Morrisons, Tesco and Sainsbury’s has now dropped to 149.6ppl, a level not seen since fuel prices surged following the outbreak of the US-Iran conflict earlier this year.
Morrison’s have the narrowest range of prices from station to station across all of the supermarkets while Asda has the widest. So depending on your location prices will continue to vary across the brands.
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Download the AppThe move lower at the pumps comes as oil markets continue to unwind the geopolitical risk premium that built up during the conflict. Brent crude fell sharply on Wednesday, closing just above $73.50/bbl, a level not seen since before the conflict began.
Just two weeks ago Brent was trading close to $92/bbl. Since the signing of the US-Iran Memorandum of Understanding, which established a 60-day negotiation period and enabled the reopening of the Strait of Hormuz, fears of a prolonged disruption to global oil supplies have eased considerably. As shipping traffic has returned to the region, Brent has fallen by more than 20%.
However, lower crude prices have yet to fully filter through to refined fuel markets. Wholesale diesel and gasoline prices remain approximately 9ppl higher than they were at the end of February, suggesting there is still scope for further reductions at the pumps if current market conditions persist.
The speed of the decline in crude oil highlights how quickly geopolitical risk premiums can disappear once supply concerns begin to ease. The key question now is how quickly lower wholesale prices are passed through to motorists.
With supermarket unleaded now back below 150ppl and wholesale markets continuing to soften, further price cuts across both unleaded and diesel remain a realistic prospect in the coming weeks. Drivers can expect so see prices fall through the next 5 to 10 days.
With the sudden price movements, the range of prices at the pumps has increased, checking prices before you fill can help drivers save. Supermarkets are not always the cheapest option for many drivers as independent retails can often be competitive on pricing, particularly in a falling market.