Can we expect prices to drop even further or will they slowly go up once more? We had one of the steepest price rises seen since 2000 back in April and it seems it won’t be heading that way soon unless the current tensions in Iran increase or create a more unstable environment.
Current price outlook
Asda, Morrisons and Sainsburys have all recently announced two price drops, the first started on the 6th June and it brought down prices at Asda to 126.7ppl for unleaded and 128.7ppl for diesel. The second drop was even more drastic, bringing it down further to 123.7ppl on unleaded and 124.7ppl on diesel.
Asda Senior Fuel Buyer, Dave Tyrer said “We’re pleased to once again lead another fuel price cut and to help our customers’ hard-earned cash go a little further. When filling up at an Asda petrol station you will pay no more than 124.7ppl on diesel and 123.7ppl on unleaded which will be a welcome boost for the millions of drivers across the country.
“Compared with a week ago, we’ve saved drivers 7ppl on diesel or £3.85 when filling a 55-litre tank”
Both Morrisons and Sainsbury’s matched the drops pretty quickly, but as their pricing strategies are different the drops appear differently.
In a press release, Morrisons announced that it was cutting the cost of diesel by up to four pence-a-litre and unleaded by up to three pence a litre from the 15th June at all of its UK petrol stations.
David Pegg, Fuel Buying Manager for Sainsbury’s, said: “As we head into the busy summer months we are committed to helping our customers live well for less, whether they’re stocking up on groceries or refuelling their cars. That’s why we’re dropping the price of diesel by up to 4p per litre and unleaded petrol by up to 3p per litre across our forecourts from 15th June . This is the second time we’ve dropped prices on fuel in as many weeks”.
The story before
Before these price drops at the beginning of the month, prices were at highs nearing 130ppl on unleaded and almost 137ppl on diesel, according to UK averages. There was also a greater disparity between petrol and diesel, which has now been brought to around 2ppl difference.
Oil prices had been higher a month ago, and from the end of April to Mid-May was sitting at around $72 a barrel, it fell $10 a barrel in mid-June, hence the price drop we’ve seen now. It normally takes around two-three weeks for oil price drops to be felt at the pumps, which is why any drops called for as soon as the oil price goes down never happens. It is only when the wholesale fuel price goes down do we see an immediate drop at the pumps.
Instability in the markets from Iran and tensions in the Middle East escalated fuel prices but it has since dropped. It is expected that by the end of the year we could be seeing oil at much higher prices at up to $90.
What can we expect soon?
While the oil price stabilised for a week or so at the low $60 a barrel mark, they’ve started to rise in the past few days, so this current price spread may not be around for long so take advantage of it while you can.
The price at the pump may drop a few pence more but it seems unlikely to be any more drastic drops for the next few weeks as the oil prices haven’t fallen below the $60 barrel mark. Hopefully, there will be a period of stability and we won’t see any major rises or falls but as with anything geopolitical that is highly unlikely.
A new prime minister may cause Brent Crude to increase slightly as the world waits to see what happens with Brexit, trade agreements and response to America’s trade sanctions. The increasing pressure from America on China and the Middle East may also drive up prices and we may even see a higher oil price soon as the attacks in Iran continue.