Oil Prices Drop Below $60 Amid Peace Talks, But Savings Not Fully Passed to Drivers
Brent crude oil prices fell to $59.20 per barrel, reaching their lowest level since early May. This marks the first time in over seven months that prices have dipped below the $60 mark, influenced by renewed hopes for peace talks.
Wholesale oil prices have declined by more than 7% during the month. In the UK, petrol prices edged down slightly from 137.5p per litre to 137.3p per litre, while diesel prices decreased from 146.9p per litre to 146.6p per litre.
Luke Bosdet from the AA criticized forecourts for harming both drivers and businesses by not passing on these savings fully to consumers. Despite the drop in oil prices, some fuel prices reportedly increased last weekend. The AA's analysis estimated that petrol prices should have dropped by about 7p per litre by the end of last week, meaning a 55-litre tank could save more than £4.60 including VAT if retailers passed on the savings.
On the geopolitical front, former President Trump stated that a deal regarding Ukraine is closer, while Ukrainian President Zelenskiy mentioned that proposals supported by the US could be finalized within days. According to Martijn Rats from Morgan Stanley, a return to historical trading patterns might release tens to hundreds of millions of barrels of oil into the market.
Derren Nathan from Hargreaves Lansdown noted that although peace talks are back on the agenda, there could be false dawns. The market currently remains oversupplied with oil prices significantly below earlier peaks.
