Speaking to Express.co.uk Paul Holland, managing director of UK Fuel at FLEETCOR, explained there was currently a huge amount of volatility in oil markets. He said: “Covid is causing a lot of chaos. We’ve just come off a dramatic increase and now seeing a dramatic fall in the price of crude.” Oil prices have fallen in recent weeks due to a combination of the Omicron variant raising fears around demand as well as a decision by the Organisation of Petroleum Producing Countries (OPEC) to stick to plans to ramp up production in January by 400,000 barrels per day. Susannah Streeter, Senior Investment and Markets Analyst at Hargreaves Lansdown said the decision: “Should help keep the lid on steep price rises”.
However she warned: “As far as petrol prices are concerned, although they are inevitably linked to the price of oil, there are many other factors to consider such as refining capacity and demand for other oil, that the fluctuations of Brent or WTI crude does not immediately translate to a similar movement at the pumps.”
Mr Holland also explained that oil prices wouldn’t necessarily fall next year due to OPEC’s decision explaining this would already have been priced in.
He added that OPEC had also left the door open for changes to the production plans if the Covid situation changes.
Analysts have cautioned that increased restrictions as the Omicron variant spreads could lead to a fall in demand for oil, particularly if global travel is affected.
RAC fuel spokesman Simon Williams called for greater Government action commenting: “It’s a sad fact that the Chancellor’s fuel duty freeze last month, while welcome, simply wasn’t anywhere near enough to ease the burden now being placed on millions of households who have no choice but to use their vehicles.
“While the Chancellor could introduce a temporary cut in VAT on motor fuel it might be better for the Government to ask the biggest retailers to explain why they’re charging such high prices for fuel when wholesale prices have dropped.”
The RAC are also suggesting retailers lower the prices on their forecourts, suggesting a drop of 12p a litre for petrol and 7p for diesel.
Otherwise, the group says, retailers should clearly explain the reasons for charging current prices.
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A spokesperson for the British Retail Consortium said: ““Supermarkets are keen to provide their customers with the best value for petrol through their forecourts, offering the cheapest petrol in the country.
“Supermarkets work hard to pass on changes in wholesale prices to relieve pressure on consumers, though prices at the pump will be influenced by various forces, including tax, oil prices and operational costs.”
Mr Holland predicted despite the current market volatility retail prices would eventually begin to settle next year.
He said: “I would expect to see retail prices come down by a few pence a litre.”