Crude prices tumble amid ceasefire between Iran and Israel
READ MORE: Oil price tumbles as ceasefire between Israel and Iran holds
The outlook remains uncertain and oil prices could rise again if hostilities between the two countries resume.
However, the dynamics of the oil market mean it would require a significant rise in the price of crude before motorists notice a big increase in the cost of filling a fuel tank. The impact may not be felt for some time.
On its website the RAC notes:
'Fuel retailers base pump prices on the wholesale cost of petrol and diesel, but there is typically a two-week 'lag' between pump prices moving to reflect any change in the wholesale price as this is the time it takes for fuel to work its way through the supply chain to the forecourt.'
The motoring organisation adds: 'The total retail price paid at the pump also includes a significant amount of tax – 57.95p per litre in fuel duty and 20% VAT.'
The RAC's latest estimate of the average price of a litre of unleaded petrol is 133.59p. The price of diesel is estimated to average 140.15 per litre.
READ MORE: Israeli-owned firm takes control of UK's biggest gas field
The price at the pump will also be influenced by factors such as transportation costs and the profit margins that firms in the supply and distribution chain aim to achieve. These include the refineries that process crude into petrol and the retailers that sell it to motorists.
The RAC notes: 'Local prices are very often driven by the presence of supermarkets keen to compete on price or an independent forecourt retailer that is determined to offer the cheapest fuel.'
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- Scottish Sun
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