Oil prices have dipped below 80 US dollars a barrel for the first time in four years, boosting hopes for cheaper petrol on UK forecourts.
The price of Brent crude for December delivery fell as low as 79 US dollars a barrel after industry cartel Opec yesterday predicted that demand for its oil will be slightly lower next year at 29.2 million barrels a day.
The world’s uncertain growth outlook, with the eurozone stagnant and Chinese expansion showing signs of easing, has fuelled fears that there will be a glut of oil swilling around the global economy.
Forecourt prices in the UK have fallen in recent weeks, although the poorer pound-dollar exchange rate means prices are not as low as they could be.
The average price of unleaded petrol stands at 123.15p with diesel at 127.63p, the AA said. The cost of filling up a typical 50 litre tank of unleaded petrol is about £2.50 cheaper than last year, the motoring group said recently.
Opec members are due to meet next week when they will be under pressure to cut production in order to shore up the price of products such as Brent crude, which slipped below the 100 US dollar mark in September and has continued to head lower.
Some of the smaller members of the OPEC cartel are likely to have been caught on the hop by dominant Saudi Arabia’s recent unilateral move to cut prices to the US.
The move is seen as an attempt by the kingdom – which is big enough to withstand lower prices – to remain competitive with shale oil.
It will also tighten the squeeze on its smaller rivals Iran and Russia, which are more dependent on higher prices, resulting in increased tensions at this month’s meeting. Others such as Venezuela will also be hurt.
Closer to home, UK-based oil giants BP and Royal Dutch Shell have acknowledged the impact on their business, causing them to tighten the purse strings rather than pursue some costly spending projects.