UK petrol prices poised to fall further as oil production may be ramped up

Global oil prices have tumbled by more than $1 a barrel in a sign that pressure on hard-pressed households at the petrol pumps could ease further.

The price of Brent crude fell to $63.86 a barrel on Thursday after reports that the Opec oil cartel and its allies may increase their production for July despite weaker global demand for fossil fuels.

The price of crude is now well below the $80.53 a barrel average recorded last year, which has helped to drive pump prices to their lowest level in almost four years.

The RAC motoring group said petrol prices in the UK fell by 2p a litre in April, the second consecutive monthly fall, to an average of 134.1p for petrol, while diesel prices fell from 142.6p to 140.6p a litre.

The latest data showed that pump prices have fallen further, to 132.50p a litre for petrol and 138.80p a litre averaged across the UK. The RAC forecasts that fuel prices should continue to fall.

The fuel prices are some of the lowest paid by UK motorists at the forecourt since July 2021, and are well below the peak petrol price of £1.92 in July 2022 after Russia’s full-scale invasion of Ukraine triggered a surge in energy markets.

The global oil market has tumbled since hitting highs of almost $128 a barrel in early 2022 despite the conflict in Ukraine and the war in Gaza. The price fall has accelerated since the US president, Donald Trump, triggered fears of a global economic recession last month by setting a number of tariffs on imported goods.

Despite concerns over the health of the global economy, which has a direct impact on the demand for oil, the Opec cartel and its allies, known as Opec+, are reportedly poised to increase their exports by 411,000 barrels a day for July.

Although no final agreement has been made, the RBC Capital analyst Helima Croft said in an investor note on Thursday that the reported output increase was the “most likely outcome” from the meeting.

Opec+, and its de facto leader, Saudi Arabia, cut their production last year to help shore up the global oil price, which has weakened because of shaky demand forecasts and an abundance of supply. It is now in the process of unwinding those curbs to allow members of the cartel to produce more oil.

“A key question will be whether the voluntary cut will be fully drawn down before the leaves turn brown in many parts of the world in line with the original taper schedule,” Croft said.