UK markets closed

UK fuel prices see record plunge as coronavirus saps oil demand

Edmund Heaphy
Finance and news reporter
Fuel prices have seen a record plunge in the UK in recent days. (Jonathan Nicholson/NurPhoto via Getty Images)

Fuel prices in the UK fell the most on record over the past week, as the spiralling coronavirus pandemic sapped demand for oil across the world.

The average cost of a litre of petrol fell from almost £1.20 last week to around £1.12 on Monday, according to the Office for National Statistics (ONS).

Average diesel prices fell from £1.23 to around £1.19 during the seven-day period, the ONS said.

The declines were the sharpest seen since the UK government began collecting average fuel price records in 2003.

“Pump prices are beginning to reflect the plunge in costs but there is much further for them to fall,” said AA fuel price spokesman Luke Bosdet.

Read more: World Bank warns of economic pain and poverty for Asia

“Lower pump prices are not an excuse for people with cars to break the lockdown and drive unnecessary journeys. But they do offer some welcome news to lift drivers’ spirits,” he said.

Supermarkets Asda and Morrisons were among the fuel retailers who trimmed fuel prices by as much as 12p per litre of petrol last week. The price per litre of diesel at both supermarkets fell by 8p.

The figures do not reflect the huge plunge in crude oil prices seen on Monday.

A price war between Saudi Arabia and Russia and a drop in demand amid the global pandemic pushed oil prices close to their lowest level in 18 years.

Crude oil (CL=F) was trading 2.1% higher on Tuesday, at $20.52 per barrel. Brent (BZ=F) was down by less than 0.1% to $22.75.

Analysts believe that prices could fall further over the next few weeks, reflecting the impact of widespread lockdowns across the world.

Read more: UK economic growth flatlined even before coronavirus hit country

The collapse in the price of oil will cost oil giant Royal Dutch Shell (RDSB.L) between $400m (£323m) and $800m in the first quarter alone, the company said on Tuesday.

“While equities have had a dire quarter, oil prices have fared even worse. March has seen crude oil prices fall over 50%, their worst monthly performance ever, as demand gets crushed in the face of lockdowns across the global economy,” said Michael Hewson, the chief market analyst at CMC Markets, on Tuesday.

“The biggest beneficiaries will be key workers who have to keep driving whilst the rest of us restrict journeys to a minimum,” said RAC Foundation director Steve Gooding.

Watch the latest videos from Yahoo UK