Petrol price cuts forecast, as recession fears hit global oil market

Fears that US president Trump’s tariff and trade war will lead to global recession continue to dampen global oil prices, with petrol and diesel prices expected to fall as a result.

Last week, the RAC predicted the price of petrol could fall to 130p a litre, down from 136p at forecourts before Easter, based on oil trading at approximately $65 (roughly £50) per barrel on the global market. 

Yet analysts’ projections of weakened economies reducing global demand caused the price to slip further, with West Texas Intermediate crude at $60 per barrel and Brent Crude at $63 on Friday 11 April. 

Typically, oil producers respond to falling prices by cutting production, but recently the OPEC (Organization of the Petroleum Exporting Countries) group of nations surprised markets by going ahead with a pre-tariff plan to increase production. It led some pundits to speculate the Gulf states were responding to US pressure to lower pump prices for US citizens as a perceived dividend for Trump’s economic strategy.

Analysts at banking company, Citi, forecast that Brent Crude would trade at $60 a barrel for the next three months, while an analyst at Danske Bank said OPEC’s decision “effectively means there is no longer anybody around to catch a falling oil price”, adding that a developing trade war could see prices “drop below $60 a barrel and further".

The US Energy Information Administration (EIA) – the statistics department of the Department of Energy – has lowered its projections for both oil prices and demand, suggesting the world will need 400,000 fewer barrels this year as a direct result of economic slowdown. It’s currently forecasting an average price of $61 per barrel of Brent Crude in 2026, which would mean cheaper fuel prices could be around for a while.

RAC head of policy Simon Williams said: “With the cost of a barrel of oil now at its lowest cheapest since the pandemic in April 2021, wholesale fuel costs are falling fast – putting more pressure on retailers to cut pump prices.”

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