LONDON: Supermarkets in Britain have slashed their petrol prices as the cost of crude oil continued to slide.
Asda, Sainsbury’s and Tesco all announced a cut in the price of unleaded fuel by 2p, leading to predictions that motorists could soon be buying petrol on the forecourt for £1 a litre.
If the conditions stay right, we could see some even lower prices in a few weeks as people return to work after the summer and the school run begins again,” said Rod Dennis from motoring group RAC.
And if Brent crude were to move to the $40 a barrel mark, the prospect of some enterprising retailers selling fuel for £1 per litre will make a return,” he said.
Asda and other supermarkets are now selling unleaded petrol at 109.7p a litre compared with around 132p in the summer of last year. The 17% fall comes after the price of crude has more than halved over the same period.
Brent North Sea oil was trading at $45.53 per barrel on Friday, down over 2% on the day, while the equivalent US crude, West Texas Intermediate, fell to a fraction above $40.
American oil is now facing its longest run of weekly declines in almost 30 years, raising pressure on the Organisation of the Petroleum Exporting Countries (Opec) to meet and agree a cut in output to try to put a brake on further falls.
The oil price is down from highs of $115 in the summer of last year due to a glut of production combined with lower-than-expected demand. New output from US shale fields, Iraq and even the North Sea has swamped the market but Opec has so far refused to cut back its production targets.
The latest falls have been driven by expectations of new oil coming from a post-sanctions Iran but also from growing fears about a slump in the Chinese economy causing a global downturn.
New data from Beijing showed the manufacturing sector had declined in August by its largest amount for six and a half years while the government has also unnerved traders with a surprise devaluation of the currency earlier this month.
China is the world’s largest oil importer and there are fears of lower crude demand in the country in the second half of the year when global oil supply is expected to rise even further.
