Petrol prices across the country could fall by up to 10p if the cost of oil continues to stay low, experts have said.
The price of a barrel of Brent crude, the international standard, had reached around 35.50 US dollars at just before midday on Monday as Saudi Arabia and Russia fell out over attempts to control production.
It marks its lowest point since 2016, and could see savings passed on to customers at the pumps, said Simon Williams, the fuel spokesman for RAC, a car insurer.
“This is looking like the biggest single daily drop in the oil price in 20 years. It should translate to some serious cuts at the pumps, particularly as the price of both petrol and diesel is still overpriced despite two rounds of cuts from the supermarkets last month,” he added.
He added: “We ought to see at least 10p a litre coming off the price of unleaded in the next fortnight which would produce an average of 113p – a price last seen in October 2016.”
Luke Bosdet, the AA’s fuel price spokesman, said that price could drop by between 7p and 8p. A 7p drop would save drivers around £3.85 per tank, the AA said.
“The spat between oil producers echoes the oil price crash in 2015, when £1-a-litre fuel returned to UK petrol stations,” Mr Bosdet said.
He added: “There is still a long way to go and the chances of another major collapse in forecourt prices will depend on how long the oil price plunge continues and how quickly UK retailers take to pass on savings.”
Customers are unlikely to see the full 27% saving on the price for a barrel of unprocessed oil. The cost of petrol and diesel is also largely dictated by other factors.
Around 60% of the price that customers pay for petrol in UK forecourts is for VAT and tariffs, according to figures from the European Commission, compiled by Fuels Europe.
The last time oil prices were this low was February 2016, when both diesel and petrol were selling for 101.4p, according to government data compiled by RAC.
Petrol cost 122.4p, and diesel was 126.6p earlier this month, according to the most recent figures.
Eyes are now likely to be on Wednesday’s budget, when Chancellor Rishi Sunak could hike fuel duty.
The big supermarkets, which sell most of the country’s fuel, are most likely to slash their prices first, Mr Williams said.
Customers could face an extra boost from cheaper home energy prices, said Will Owen, energy expert at Uswitch.
“The oil price crash could be good news for consumers, who may see a knock-on effect of reduced household gas and electricity prices if this situation continues,” he said.
“But any impact will take time to work its way through to bills, especially for consumers who are on fixed-rate deals.
“People will start to use less energy anyway as we head towards warmer temperatures and lighter evenings through the spring, so households may not notice any major differences until next winter.”
Britain generates around 40% of its electricity from gas, and many households use gas directly for heating, hot water and cooking.
However, many large companies buy their gas several years in advance, meaning it could take a long time for the price drop to be felt on household bills, Mr Owen said.