Drivers may soon enjoy a 4p per litre decrease in petrol prices, as indicated by motoring group the AA. The group suggests that the wholesale cost of fuel, which determines what retailers pay, has sufficiently decreased to justify a price drop at the gas pumps.
The recent conflict in the Middle East led to a surge in oil prices; however, these prices have since retreated from their peak levels. Brent crude prices rose by nearly 4% to over $98 per barrel on Thursday due to concerns over a new two-week ceasefire in the region, but they remain significantly lower than the recent high near $120.
The AA reports that wholesale petrol costs were around 67p per litre earlier this week, dropping to as low as 59.5p before rebounding to 63p. This situation could potentially result in a 4p per litre reduction in average pump prices. Similarly, diesel prices initially fell from around 102p per litre to below 82p, but rose back up to 87p on Thursday, still reflecting a 15% decrease from the peak.
Recent data shows that average pump prices are on the rise, reaching 158.0p per litre for petrol and 190.8p per litre for diesel. The AA suggests that while a fuel price reduction may not occur by the weekend, it could happen in the following week based on the typical 10 to 14-day lag in price movements from wholesale to pump prices.
The outlook for fuel prices depends on ongoing events, with tensions in the Middle East showing little signs of easing despite the ceasefire. The uncertainty surrounding the reopening of the vital Strait of Hormuz, which facilitates global oil and gas flow, adds to the market’s apprehension.
Financial markets are exhibiting renewed nervousness following the initial optimism surrounding the US-Iran ceasefire agreement. The ongoing strikes by Israel on Lebanon are a key concern, potentially impacting the fragile peace. The lasting effects of the recent conflict are expected to linger, affecting infrastructure and causing inflationary pressures on the broader economy.
The International Monetary Fund is expected to revise its global economic forecasts downwards due to the repercussions of the conflict, which have disrupted growth prospects. Overall, the impact of the recent events is likely to have a prolonged influence on various economic sectors and global growth forecasts.
