The average price of a litre of unleaded is now under 170p (169.8p) for the first time since May, with the price cuts made by retailers in August leading to the average cost of filling a 55-litre petrol car dropping £6.77 in the month, from £100.16 at the start of the month to £93.39 at the end.

But the RCA says this reduction only tells part of the story as, with the average weekly delivered wholesale price of petrol falling through the month to reach just 124.08p last week and allowing for a significant retailer margin of 10p per litre, average forecourt petrol prices should actually be around the 161p mark.

The last time the delivered wholesale price of petrol was at its current level was in late April, when retailers were charging on average around 162p per litre.

Drivers of diesel vehicles saw 8.35p coming off the average price of a litre with the pump price ending August at 183.71p, a price the RAC considers is a fairer reflection of wholesale prices. This means it now costs £4.59 less to fill a 55-litre car than it did a month ago, with costs down from £105.63 to £101.04.

The RAC’s analysis suggests that supermarkets, which have traditionally led on fuel prices, are not necessarily the cheapest places for drivers to fill up with unleaded, with enterprising independents in some locations choosing to undercut them and charge a fairer price for the fuel.

The biggest supermarkets were charging just 1.62p below the average price of petrol last month (168.18p), compared to the typical 3p. It is also the case that supermarkets in some parts of the country appear to be charging much less for the same fuel than in other areas.

While the cost of oil – the biggest contributor to wholesale petrol and diesel prices – fell significantly in August, down $7.67 to end the month at $92.36, dark clouds are beginning to gather once again.

OPEC+, which represents many of the biggest oil producing nations, may choose to cut production at a meeting next week. If it does, oil prices may begin to rise once again. Sterling also had its worst performance against the US dollar in August since October 2016, with a pound worth just $1.16 by the month’s end, which – as fuel is traded in dollars – makes it more expensive to purchase on the wholesale market.

Analysis by the RAC in August also revealed that the UK is one of the least generous countries when it comes to supporting drivers with high petrol and diesel prices. As an example and by way of contrast, the French government actually increased its discount on fuel to 30 cents from 15 cents on 1 September, which will result in pump prices under the equivalent of £1.50 a litre across the country.

RAC spokesperson Rod Dennis said: “Twelve pence a litre is a lot to come off prices in a single month so there’s no doubt things could be worse, but in reality drivers of petrol vehicles are still invariably getting a raw deal at the pumps. For whatever reason, major retailers are choosing not to pass on in full the reductions in the wholesale price of unleaded they’ve been benefiting from for some considerable time now – and this continues to mean drivers are often paying much more every time they fill up than they should.

“By the end of August wholesale prices were lower than they were at the start of the month, so even factoring in buying cycles there is a very strong case for the biggest sellers of fuel to cut their forecourt petrol prices further. Allowing for a generous 10p a litre margin, we should be seeing the petrol sold for around 161p a litre.

“Some big supermarket sites aren’t too far off charging this – but there’s a real postcode lottery out there with prices varying wildly depending on where a driver is in the country. Drivers must shop around for the best deal they can, and we applaud those independent retailers who are doing their best to charge a fairer price for fuel and support their local communities through this incredibly expensive time.

“There’s also no getting away from the fact that fuel can make up a huge chunk of a household’s monthly expenditure alongside energy costs. With many people heavily dependent on the car – whether that’s to transport children now new school terms are underway again, or to see friends and family in different parts of the country – drivers need all the help that they can get.

“We urge the incoming Prime Minister to heed our calls for more financial assistance for drivers, such as a deeper cut in fuel duty, and to look carefully at the much more generous packages of help being offered to those in other countries across Europe.”

Pump price changes by month – recent price cuts don’t make up for the rises earlier in the year

All prices are average in pence per litre

Regional pump prices compared

Unleaded

Diesel

Find out more about UK petrol and diesel prices on the RAC website.

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Oil prices had fallen earlier this week but they rose more than one percent on news of the OPEC+ decision, with the main international contract, Brent, climbing back above $100 per barrel.

It small increase is likely to be a disappointment for US President Joe Biden who lobbied for a big hike to tame soaring energy prices on a recent trip to Saudi Arabia.

“The smallest increase in OPEC+ history will do little to help the ongoing global energy crisis,” Edward Moya, analyst at OANDA trading platform, said.

“Oil looks like it will still remain stuck around the $100 barrel level even as the global economic slowdown accelerates. The Biden administration will not be happy and this will be a setback in improving US-Saudi relations.”

Biden said after his meetings with Saudi officials that he was “doing all I can” to increase the oil supply.

But OPEC+ includes Russia, putting Saudi Arabia in a tight spot between Washington and Moscow.

After cutting production in 2020 in response to falling prices during the Covid pandemic, OPEC+ agreed to raise its quotas last year as demand rebounded.

OPEC+ began to add around 400,000 barrels per day to the market last year, renewing the policy every month until June. It upped production by almost 650,000 bpd in July and August.

Its output is supposed to have returned to pre-Covid levels after cuts totalling 9.7 million bpd – but only on paper, as some members of the 23-nation group have struggled to meet their quotas.

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In a statement released by the UK, they said they were considering: “a comprehensive prohibition of all services that enable transportation of Russian seaborne crude oil and petroleum products globally, unless the oil is purchased at or below a price to be agreed in consultation with international partners.”

“In considering this and other options, we will also consider mitigation mechanisms alongside our restrictive measures to ensure the most vulnerable and impacted countries maintain access to energy markets including from Russia,” the statement added.

The G7 group of wealthy developed economies is made up of Canada, France, Germany, Italy, Japan, Britain and the US.

Member countries are exploring ways to plug energy shortages and tackle soaring prices while sticking to their climate commitments, amid a standoff with Russia after the invasion of Ukraine.

“As we phase out Russian energy from our domestic markets, we will seek to develop solutions that reduce Russian revenues from hydrocarbons, support stability in global energy markets and minimise negative economic impacts, especially on low- andmiddle-income countries,” the statement said.

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Drivers badly need a break in the relentless daily rises in fuel costs, the motoring group said.

RAC fuel spokesman Simon Williams said: “Both petrol and diesel prices soared to yet new record heights on Tuesday. The average price of petrol went up by over a penny a litre to 164.98p and diesel by more than 2p to 176.04p which means petrol has now gone up 13p since the start of the month and diesel by a nearly 21p – both of which are the fastest rises on record.

“A full tank of unleaded for a family car is now almost £91 (£90.74) and diesel nearly £97 (£96.82). Drivers can save nearly 4p a litre by buying their fuel at one of the big four supermarkets where the average for petrol is 161.20p and 171.58p for diesel which would save them £2 a tank.

“We continue to remain hopeful that retailers will soon start to pass on recent reductions in the price of wholesale fuel to drivers when they next buy supply. That ought to lead to petrol stabilising at around 160p while diesel ought to stay where it is based on current wholesale prices.

“The big question is how keen will retailers be to pass on those savings at the pumps as they will no doubt be extremely conscious of protecting themselves from any more rises that could suddenly materialise. Drivers badly need a break from these relentless daily rises.

“With the Spring Statement just a week away drivers will be looking to the Chancellor to end their misery by cutting duty or VAT. One thing’s for sure simply reiterating that fuel duty has been frozen at 58p a litre simply isn’t going to cut it.”

The call came as the International Energy Agency cut its world oil demand forecast for 2022 , warning that sanctions against Russia over its invasion of Ukraine could spark a global supply “shock”.

“Faced with what could turn into the biggest supply crisis in decades, global energy markets are at a crossroads,” the IEA said in a monthly report.

“While it is still too early to know how events will unfold, the crisis may result in lasting changes to energy markets.”

Russia, the world’s biggest exporter of oil, has been hit with a slew of international sanctions over the war in Ukraine, which sent oil prices soaring.

While the measures exclude the energy market, the IEA said major oil companies, trading houses, shipping firms and banks have “backed away from doing business with the country”.

The US and Britain have announced their own bans on Russian oil imports.

“The implications of a potential loss of Russian oil exports to global markets cannot be understated,” the IEA said.

“The prospect of large-scale disruptions in Russian production due to wide-ranging sanctions as well as decisions by companies to shun exports after Moscow’s invasion of Ukraine is threatening to create a global oil supply shock,” it said.

The agency lowered its forecast for growth in oil demand by nearly one million barrels per day and now expects world oil demand to reach 99.7 million barrels per day this year.

The IEA also said that three million barrels per day (bpd) of Russian oil and products may not find their way to market beginning in April in the wake of its invasion of Ukraine, as sanctions bite and buyers hold off.

“We see a reduction in total exports of 2.5 million bpd, of which crude accounts for 1.5 million bpd and products 1 million bpd,” the IEA said in its monthly oil report.

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