Petrol prices could fall by £1.50 a tank within weeks

Petrol prices could fall by as much as 3p a litre as a result of falling wholesale prices and a potential supermarket price war, the AA has said.

The price of both petrol and diesel is currently at a four-year high, after 11 consecutive weekly price increases.

Average petrol prices hit 130.6p a litre this week, while average diesel prices rose to 134.6p a litre.

The AA said it was now a question of “how quickly” supermarket forecourts passed on lower costs to drivers.

The motoring organisation – which offers advice to drivers – said falling wholesale costs had in the past triggered a forecourt price battle, with supermarkets jostling to offer drivers the cheapest prices.

Luke Bosdet, from the AA, said: “Drivers were told earlier this month that there was ‘no end in sight’ to rising pump prices.

“Now, they should be looking for a £1.50-a-tank cut in petrol costs.

“The key question is to what extent and how quickly the fuel retailers decide to pass on the savings.”

He said potential fuel savings had come from a drop in oil refining margins for wholesalers and a recent strengthening of the pound.

The pound had been rising against the euro and the US dollar this month.

However, it fell on Friday after Theresa May’s assertion that a no-deal Brexit was better than “a bad deal”.

The average price of petrol and diesel in the UK is currently at its highest since July 2014, following significant increases over the past two years.

According to the government’s official statistics, average prices have increased by more than 30p a litre since January 2016.

This year, petrol prices have gone up by 10p a litre, while diesel has increased by 11p.

In May, prices went up by 6p a litre in one month – which the RAC said was the biggest monthly increase for 18 years.

Earlier this month, Chancellor Philip Hammond hinted that a freeze on fuel duty may end.

He told MPs that previous analysis showing the benefits of continuing to freeze fuel duty against tax losses would “have to be looked at again in the context of the economy today”.

Fuel duty has been kept at 58p per litre since 2011. The chancellor will give his autumn Budget on 22 November.