Global oil prices have decreased by over a dollar per barrel, which could provide some relief for households at the gas pumps.
On Thursday, Brent crude oil prices dropped significantly, and reports suggest that the OPEC oil cartel, along with its allies, might boost production in July, even with low global demand for fossil fuels.
Currently, crude oil prices are well below last year’s average of $80.53 per barrel. This decline has contributed to some of the lowest pump prices seen in nearly four years.
The RAC Motor Group noted that UK gasoline prices fell by 2p per liter in April, marking two consecutive months of decline, bringing the average down to 134.1p per liter. Meanwhile, diesel prices also dropped from 142.6p to 140.6p.
Recent data indicates that pump prices are continuing to decrease, now averaging 132.50p per liter for gasoline and 138.80p per liter across the UK. The RAC predicts that fuel prices may keep falling. These are among the lowest prices experienced by British drivers since July 2021, especially when compared to the peak of £1.92 in July 2022, which followed the Russian invasion of Ukraine that triggered a spike in energy costs.
Despite ongoing conflicts in Ukraine and Gaza, the oil market fell sharply from a peak of nearly $128 per barrel in early 2022. This drop in prices has accelerated following recent tariffs imposed by US President Donald Trump, which created concerns about a potential global economic downturn.
Even with worries surrounding the global economy impacting oil demand, the OPEC cartel and its allies, known as OPEC+, are expected to increase July exports by 411,000 barrels per day.
No final agreement has been reached yet, but RBC Capital Analyst Helimacroft mentioned in an investor memo that this potential output increase is the “most likely outcome” from their upcoming meeting.
OPEC+ and its main player, Saudi Arabia, had previously cut production to stabilize global oil prices. They are currently considering boosting production among their cartel members.
Croft pointed out that a key question remains whether these cuts can be fully reinstated before the leaves change color in many regions, following the original taper schedule.
