Why UK Unleaded Prices aren’t going to continue to fall 

UK drivers have seen a welcome drop in unleaded petrol prices, now averaging 135p per litre (ppl) – a level not witnessed since October 2021. This decline is largely due to an oversupply in the wholesale market, which has pushed down the price of Brent crude oil. The strengthening of the pound (GBP) against the US dollar (USD), rising from $1.27 to $1.33 USD/GBP between July and September, has also helped lower prices at the pump, as a stronger pound makes oil imports cheaper. 

While some reports, including from the RAC, suggest prices may continue to fall and could reach a three-year low by the end of September, our analysis indicates that further significant drops are unlikely. The price of Brent crude oil has fallen sharply from $86 per barrel in July to $69 by mid-September, a 20% decrease. However, prices have since rebounded to $75 per barrel by the 25th of September, suggesting that the market has stabilised. 

At the forecourts, unleaded prices have dropped from 145ppl in mid-July to the current 135ppl. Yet, the pace of these reductions has slowed, and without continued declines in wholesale oil prices, the likelihood of further significant cuts at the pump is low. 

For now, price competition among local petrol stations will play a crucial role in determining whether drivers can benefit from lower prices. Supermarkets like Morrisons have led the charge, consistently undercutting rivals by over a penny per litre compared to Sainsbury’s and Tesco. Checking local prices using tools like the PetrolPrices app can help drivers find the best deals, as some independent stations are also offering competitive rates. 

Regionally, London remains the most expensive area for unleaded fuel, while Northern Ireland boasts the lowest prices. The gap between the two has narrowed from 8ppl in May to 5.5ppl in September. 

Despite the recent drops, unleaded prices are still down by 13% compared to this time last year, but with 56% of the overall cost still made up of VAT and fuel duty, significant further reductions may be hard to come by.