Fuel retailers urged to pass on savings as oil prices fall below $60 a barrel | Petrol prices
Fuel retailers are under pressure to cut pump prices after oil prices fell below $60 a barrel for the first time in more than seven months in hopes of a Russia-Ukraine peace deal.
The price of a barrel of Brent crude fell more than 1% on Tuesday morning to $59.20, its lowest level since the beginning of May.
Wholesale oil prices have fallen more than 7% this month but the average petrol pump price is down just a penny from 137.5p a liter at the start of December to 137.3p a liter on Monday.
Diesel prices have also remained stubbornly high, falling from 146.9 pa per liter at the beginning of the month to 146.6 pa per liter this week.
Luke Bosdet, the AA’s spokesman for pump prices, said pre-trials were “creating misery for motorists and businesses”, with some prices rising as recently as last weekend despite a steady decline in the oil market.
“Essentially, average pump prices in the first half of December remained on a plateau when they could have fallen,” he added.
Oil prices began falling last month as traders assessed a potential end to the Russia-Ukraine conflict and the possibility that Kremlin sanctions on oil and gas exports could be eased and eventually lifted.
According to analysis by the AA, this should have translated into a drop of 7p per liter by the end of last week; This, if transferred to the pump with VAT added, would save a driver filling the typical 55-litre tank more than £4.60.
US President Donald Trump said earlier this week that he was “closer than ever before” to a deal to end the war in Ukraine, boosting optimism among European leaders about an end to the conflict.
Ukrainian President Volodymyr Zelenskyy said that the proposals negotiated with US officials regarding a peace agreement could be completed within a few days.
Martijn Rats, global commodity strategist at Morgan Stanley, said a return to “historical trading patterns” would effectively introduce a new inventory of oil and gas supply to the global market.
“Certainly tens of millions, maybe several hundred million barrels could become available because they are no longer trapped in these long routes,” he said.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: “A peace deal between Russia and Ukraine looks set to be on the agenda again, but there have already been many false dawns this year.”
Even without a normal resumption of Russian oil and gas exports, the market appears oversupplied, which should limit price increases next year, he added.
“Even without Russian exports, concerns about Chinese demand as well as rising production from OPEC+ members and other countries are keeping prices well below the $80 peaks seen earlier this year,” Nathan said.
