The cost of crude is continuing to fall on international commodities markets and if the current trend continues, motorists could be paying just 86p a litre for petrol – the lowest price for nearly seven years.
Oil prices have fallen to new recent lows of $30 a barrel and banks are forecasting that a $10 barrel could be on the near horizon.
Standard Chartered has joined the likes of the Royal Bank of Scotland, Goldman Sachs and Morgan Stanley to predict further falls in the price of crude, after a recent 15% drop.
Analysts have indicated that the oil market is unbalanced, thanks to over supply caused by a refusal by Opec (Organisation of Petroleum Exporting Countries) counties to cut production in the face of stagnant demand.
Analysts at investment bank Jefferies said: “The near-term outlook for the oil market is bleak.
“Opec is producing flat-out into a market which is oversupplied by more than one million barrels per day; already decelerating demand growth could decay further with slowing economic activity; and OECD inventories — which are already at record levels — are likely to expand through at least the middle of the year.”
In response to news of falling crude oil prices, RAC fuel spokesman Simon Williams said: “This latest prediction of oil hitting just $10 a barrel would have the potential to take petrol prices down to around 86p per litre.
“The last time we saw average prices this low was in early 2009. However, for prices to get this low the pound would have to get no weaker against the dollar than it is today.
“As global oil prices continue to slide, they expose just how much British motorists are paying purely in tax at the pumps.
“It is worth remembering that even if oil was almost given away, motorists would still be paying fuel duty and VAT.
“At $10 a barrel, tax would account for around 84% of the total price per litre – a clear indication of just how high a proportion of every litre we buy goes straight to the Treasury [which takes 57.95p per litre through the fuel duty, plus an additional 20% through VAT].”