Morrisons fuels new round of the supermarket petrol war with 2p a litre price cut

Major oil companies could afford to slash at least 3p a litre off pump prices as oil has dropped more than $30 in the past month, according to the AA.

The wholesale price of petrol has dropped 18 per cent and diesel by 22 per cent on international markets.

2p cut: The new prices came into effect at 6am today

Although oil reductions can take weeks to filter through, the wholesale cuts should work their way to the pumps within days. But only the supermarkets are passing on the bulk of these reductions, says the AA.

Morrisons cut 2p off the price of a litre of diesel and unleaded yesterday, bringing the national average cost at its 285 forecourts down to 121.2p and 109.9p respectively.

Asda said it would drop prices to the same for unleaded and

121.9p for diesel nationally from today. Tesco pledged to match the lowest petrol price locally at its forecourts. By contrast the average cost of petrol across the UK is 114.07p a litre, and diesel 126.33p.

Average UK pump prices peaked in mid July at around 120p a litre for petrol and about 133p a litre for diesel.

Since then the global price of a barrel of oil has fallen 21 per cent from a peak of $147.27 a barrel to $116 yesterday.

The AA said oil giants were 'dragging their feet' despite making billions of pounds in profits which critics have branded 'obscene'.

This month Shell unveiled record half year profits of nearly £8billion following BP's half year profits of £6.75billion.

The oil companies deny profiteeringand say their prices reflect the market conditions.

AA spokesman Paul Watters said: 'Although we welcome further drops in the price of petrol and diesel, big price reductions are by no means happening across the country.

'Cheapest prices in many towns are still two to three pence per litre above what drivers are paying in areas where competitive supermarkets are engaged in a dogfight.'

Fuel price comparison site Petrolprices.com said: ' Supermarkets lead the price cuts. Where a supermarket cuts prices, the majors nearby usually follow. If there's no supermarket nearby, they don't.'