Drivers could soon see a 4p per litre drop in petrol prices, according to the motoring group AA. The decrease is attributed to a decline in the wholesale fuel prices, prompting a potential reduction at the pump.
Recent Middle East tensions led to a spike in oil prices, but they have since retreated from their peak levels. Despite a temporary ceasefire in the region, the price of Brent crude rose by nearly 4% to over $98 per barrel on Thursday. However, this price is considerably lower than the recent high of nearly $120.
The AA reported that the wholesale petrol cost decreased from around 67p per litre earlier in the week to a low of 59.5p before rebounding to 63p. This situation sets the stage for a possible 4p per litre drop in average pump prices. Diesel costs also experienced fluctuations, dropping from 102p per litre to below 82p, but then rose back to 87p on Thursday, representing a 15% decrease from the peak.
Although average pump prices continue to rise, with petrol at 158.0p per litre and diesel at 190.8p per litre, the AA indicated that any fuel price reduction is unlikely to occur by the upcoming weekend but could materialize next week.
Luke Bosdet, the AA’s pump prices spokesperson, projected that based on the standard 10 to 14-day delay between wholesale cost changes and pump price adjustments, drivers could expect prices to stabilize by the following weekend and then decrease, provided the ceasefire holds.
The outlook remains uncertain as Middle East tensions persist despite the ceasefire. Continued missile attacks by Israel on Lebanon have cast doubt on the stability of the situation. The crucial Strait of Hormuz, facilitating oil flow from Gulf producers like Iraq, Saudi Arabia, Kuwait, and Qatar to global markets, remains a focal point of concern.
Financial markets are cautious following the US-Iran ceasefire, with ongoing strikes by Israel posing challenges to the agreement. The longer-term implications of the conflict on infrastructure and inflation are expected to persist, potentially impacting the global economy.
The International Monetary Fund is anticipated to revise down its global economic growth forecasts due to the conflict’s repercussions. Kristalina Georgieva, the fund’s managing director, highlighted the conflict’s adverse effects, noting that without this shock, global growth prospects would have been more positive.