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Oil Price Plunge Expected to Lower Petrol Costs for UK Drivers Amid Global Trade Concerns
Concerns surrounding potential global recession triggered by new trade tariffs imposed by Donald Trump have led to a significant drop in oil prices. This decrease is anticipated to bring relief to motorists as petrol prices at the pumps are predicted to fall below 130p per litre in the coming days. This development offers a glimmer of hope for consumers facing increasing economic uncertainty linked to international trade tensions.
Sharp Decline in Oil Prices Follows China’s Retaliatory Tariffs
Oil prices experienced a further steep decline on Wednesday, reaching a fresh four-year low. This occurred after China announced additional tariff measures on goods from the US in response to President Trump’s trade policies. The escalating trade dispute between the world’s two largest economies is contributing to anxieties about global economic stability.
China’s finance ministry stated that it would implement tariffs of 84 per cent from Thursday, an increase from the previously indicated 34 per cent. This decision intensified market fears and accelerated the downward trend in oil values.
Following this announcement, Brent Crude oil prices decreased to $59 a barrel, while West Texas Intermediate (WTI) crude also fell to $56. These benchmarks reflect the growing apprehension within the energy market.
Both Brent and WTI have now declined for five consecutive trading sessions since President Trump unveiled extensive tariffs on most imports. This move has heightened worries regarding global economic growth and the demand for fuel, as trade restrictions can stifle economic activity.
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RAC Predicts Petrol Price Drop Below 130p Before Easter
UK motorists are expected to soon experience the benefits of these lower oil prices, with cheaper petrol expected at filling stations before the Easter period, according to the RAC. This anticipated price reduction offers welcome news for drivers planning holiday travel.
The RAC forecasts that the price of unleaded petrol will decrease from its current average of 136p per litre to approximately 130p within a week. This would represent the lowest average UK price in four years. Further price decreases are possible due to weakening global economies, potentially offering even greater savings to consumers.
Oil prices declined to a deeper four-year low on Wednesday after China declared further tariff actions on US products in response to the President’s trade strategy.
OPEC+ Output Increase Adds to Oil Price Pressure
Contributing to the fall in oil prices was a recent decision by the OPEC+ group of oil-producing nations to increase output in May by 411,000 barrels per day. Analysts suggest that this output increase is likely to create a surplus in the oil market, further driving prices down.
Analyst Views on Oil Price Targets and Market Dynamics
Ashley Kelty, an analyst at Panmure Liberum, noted that ‘Some US analysts suggested that the White House aims to push oil prices closer to $50, believing the US oil and gas sector can withstand a period of instability.’ He added, ‘We view this objective as somewhat unrealistic… and it will simply result in a reduction of US production, allowing OPEC to regain its position as the primary swing producer.’
Goldman Sachs has revised its oil price forecasts, now predicting that Brent and WTI crude could decrease to $62 and $58 per barrel respectively by December 2025, and further to $55 and $51 by December 2026. These projections indicate a sustained period of lower oil prices in the medium term.
Since 2022, the price of WTI crude oil has generally fluctuated between $65 and $95 a barrel. The recent price drops signal a potential shift away from this established range.
The RAC indicates UK motorists should see the advantages of declining oil costs prior to the Easter period, with a predicted 6p per litre decrease in petrol within the next week.
Drivers Expected to Benefit from Fuel Price Reductions Soon
The RAC has stated that UK drivers should anticipate seeing the benefits of the oil price decline at petrol stations in the coming days. This offers timely financial relief for consumers.
Simon Williams, head of policy at the RAC, explained, ‘With oil prices plummeting to their lowest level in four years, drivers should expect to see price reductions of up to 6p per litre at the pumps leading up to the Easter weekend, a period known for heavy road traffic.’ This suggests significant savings for holiday travelers.
Williams further commented that ‘As long as the price of a barrel of oil remains around or below $65, particularly amidst the ongoing scrutiny from the Competition and Markets Authority, which has broadened its inquiry into the fuel retail sector, retailers will be obliged to pass on these savings to consumers.’ This regulatory pressure reinforces the expectation of price reductions.
If petrol prices do decrease to 130p per litre by Easter, it would represent the lowest price for motorists since June 2021, providing a significant price drop compared to recent costs.
The RAC also anticipates a decrease in diesel prices from the current 143p per litre to 137p. This would bring diesel prices to their lowest level since September 2021, benefiting diesel vehicle owners as well.