RAC wants the cost of fuel to fall in line with oil price slumps.

Fuel retailers have been urged to reduce fuel prices after a drop in oil prices and a strengthening in the value of the pound.

Because oil is traded in dollars, the recent weakness in British currency has been partly to blame for the inflated cost of petrol and diesel in the UK.

However, the pound has strengthened of late, with its value rising from $1.29 just a week ago to $1.32 at present rates.

That improvement in value has coincided with a fall in the value of oil, which the RAC says has caused fuel wholesale prices to fall.

British sterling and American dollar currency financial trade concept

According to the organisation, the wholesale price of unleaded petrol is now less than £1 a litre, which the RAC claims should equate to a forecourt price of around £1.25 per litre, once VAT, retailer profit margin and delivery have been taken into account.

However, the organisation's Fuel Watch data shows that the average price of petrol is now 131.23p per litre, while the average supermarket price is 127.93p per litre.

As a result, the motoring organisation has called on supermarkets to reduce their fuel prices by 2p per litre.

Woman holding fuel nozzle at petrol station

RAC fuel spokesperson Simon Williams said: “Major fuel retailers should be reacting to the sharp drop in the wholesale price of petrol by knocking at least 2p a litre off at the pumps. Motorists have suffered with rising petrol prices for most of this year with 10p a litre being added since the start of January.

“We are sure retailers will do the right thing and pass the savings on to drivers, but the question is how long will it take for them to do this. As this has come about as a result of a sudden drop in the wholesale price they can’t yet be accused of holding off on cutting, but if prices don’t fall soon then we fear this will be further evidence of the so-called ‘rocket and feather’ effect where prices go up far more quickly than they fall.

Oil industry pumps at sea

“The speed with which we have gone from seemingly endless pump price rises to a sudden moment when they should really be coming down very clearly demonstrates the volatility of wholesale fuel and how UK motorists are at the mercy of the international markets.

“The oil and currency changes have also improved the diesel price situation, with the constant rises coming to a halt for the time being.”