Petrol prices jump in July but coming weeks could bring fresh cuts
The price of petrol and diesel jumped by around 3p per litre across the UK last month but industry observers say the increase could quickly be reversed.
July saw the second consecutive month of price increases at the forecourts after several months of falling charges. March and April saw sharp drops in the price of fuel but with the country in lockdown few drivers were able to take advantage of the lower prices.
According to RAC Fuel Watch data, the average price of petrol rose by 3.21p per litre to 114.27p while diesel was up 2.95p to 118.04ppl, adding almost £2 to the cost of an average tank of fuel.
The UK’s big four supermarkets all put their prices up by more than the average but still remained cheaper overall. Average supermarket costs were up 3.5p for petrol, to 109.14p and 3.33p for diesel, 113.52p.
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However, wholesale costs have started to slide and the RAC and AA are predicting further reductions in wholesale prices as oil production is stepped up.
RAC fuel spokesman Simon Williams said: “July was another bad month for drivers with a 3p a litre rise in the price of fuel. This means petrol’s 7p a litre more expensive than it was at the end of May and diesel is 6p more, something drivers will no doubt have noticed.
“The higher prices at the pump have been driven by the cost of oil increasing steadily to around $42 a barrel from a low of $13.21 in April. But drivers may well be given some respite as oil producers are planning on ramping up production despite the risk of renewed lockdowns around the world. This could easily lead to supply outstripping demand and therefore a reduction on the forecourts of the UK.
“As it is there is some scope for retailers to already be reducing their prices. If they play fair with drivers we ought to see 2p a litre come off the price of unleaded and nearer 4p come off diesel.”
Luke Bosdet, fuel spokesman for The AA, also said that with OPEC due to increase production this month but the risk of a second wave of lockdowns around the world there was scope for prices to fall at filling stations.
He told This is Money: “Wholesale fuel is taking a second hit from coronavirus and falling demand globally is bringing down the cost.
“We already know Asda has started to cut its pump prices and, hopefully, others will follow.
“This time, UK families won't be locked down and locked out of the savings at the pump.”