Responding to news that the Organization of Petroleum Exporting Countries (OPEC) has reached an initial deal on limiting oil production, RAC fuel spokesman Simon Williams said:
“News that OPEC has agreed a preliminary deal to cut production marks a major move away from its long-term over-supply strategy. This has been aimed at trying to maintain its market share by thwarting the threat of US shale oil with a lower barrel price than its break-even production point.
“While the detail of the production curb is to be decided next month, it is well worth remembering that OPEC members often struggle to reach a consensus and that the low price strategy of the last two and a half years will be wasted if the barrel price goes above $55 and shale oil production kicks back in at full pace.
“From a motorists’ perspective we don’t feel there is cause to panic as, while pump prices may rise a little in the short-term from the current 112p a litre for petrol and 113p for diesel, we are very unlikely to see a return to the dark days of April 2012 when unleaded was 142p and diesel was 148p as a result of oil being well over $100 a barrel.
“With the oil price as of close of trading on Wednesday standing at $45 a barrel there is some way to go before motorists experience any major pain at the pumps, especially as the actual cost of the fuel only represents around a third of the pump price, with the lion’s share being made up of fuel duty and VAT.”