Ukrainian President Volodymyr Zelenskyy has announced that negotiations with US officials concerning a potential peace deal could conclude within days. US President Donald Trump has recently said that a peace deal to the long-lasting war in Ukraine is “very close.” He thinks we’re closer now than ever before. Year-to-date, wholesale oil prices are down just over 2%. For the first time in more than 7 months, Brent crude has fallen below the $60 mark.
The relevant average price at UK petrol pumps has hardly moved. It has fallen by half of a penny from 137.5p per litre when the month started to 137.3p on Monday. This minuscule reduction is in sharp contrast to the collapse in oil prices. This has created a movement to pressure fuel retailers to pass these savings on to consumers. Luke Bosdet, a spokesperson for the AA, expressed frustration, stating that forecourts are “creating misery for drivers and businesses.”
Just last month, oil prices fell off a cliff. Furthermore, traders quickly began to price in the effects of what a potential end to the Russia-Ukraine war would bring. Market analysts are starting to bet that the sanctions on Russian oil and gas exports will soon be eased or completely lifted. If that occurs, it would inundate the market with additional inventories. Martijn Rats, an energy analyst, highlighted the possibility of significant oil availability, noting, “Definitely tens of millions, maybe a few hundred million barrels could be made available because they are not locked up in these long routes anymore.”
Overall crude expenses are down 55%, those savings have not translated to gas prices at the pump. In the AA’s analysis, it has become clear that the price of oil has plummeted. Given this decline, we think 7p per litre should have been reduced by the end of last week. At the pump, motorists filling a typical 55-litre tank can save more than £4.60 on the cost of fuel. This is with VAT included in the overall amount.
“The peace deal between Russia and Ukraine looks to be back on the agenda, but there have already been multiple false dawns this year,” stated Derren Nathan, indicating caution regarding the optimism surrounding peace negotiations. Yet even so, he cautioned, concerns about Chinese demand linger on. Further, the continuing increase in production from OPEC+/KSA etc. is keeping prices well anchored below the peaks we saw earlier this year.
Fuel retailers at all levels are feeling the heat to bring their prices down as their crude input costs have fallen. In the interim, consumers are hopeful for a larger price relief at the pump.