UK motorists may see their fuel prices drop further if OPEC+ decides to go for another big increase in July.
According to motoring group RAC, the average forecourt petrol price already dropped in April for the second time in a row by 2p to 134.1 pence per litre (ppl). Diesel also saw a similar fall to 140.6 ppl. What is more, recent data shows a further 2p drop to 132.5p and 138.8 ppl for petrol and diesel, respectively.
The risk of a global economic recession is weighing down on oil prices. Despite this, the OPEC+ group announced production increases of 411,000 barrels per day (bpd) for both May and June. This is roughly triple what the group previously planned on. The group is also reportedly planning a similar big increase in July.
Brent crude is currently trading at $63.86 per barrel. Given that top OPEC producer Saudi Arabia reportedly needs a price of around $90 per barrel to balance its budget and fund its massive next-generation infrastructure projects, the move seems surprising. It could be that the Kingdom is willing to accept lower prices in the short term to put pressure on OPEC+ overproducers and US shale operators.
Big companies like ExxonMobil and Chevron, the makers of Mobil and Texaco lubricant and grease products, benefit from economies of scale and advanced technologies. Shale developments can have higher breakeven costs, however, and some operators are scaling back as the lower oil price makes drilling new wells less attractive.
