Tesco and Asda lead fuel price war as oil reserves released

Tesco has reduced the cost of petrol and diesel by 3pence per litre following the surprising release of emergency oil reserves by the International Energy Agency (IEA).

The move is sure to spark a price war as other leading supermarkets follow suit. The move will obviously be welcomed by motorists who have been paying record prices of on average £1.36 for a litre of petrol and £1.40 for a litre of diesel.

Richard Brasher, Chief Executive of Tesco UK said: “We know our customers are feeling the pinch at the moment, so we want to pass on the benefit of a fall in oil prices straight away."

Members of the IEA include many of the leading western nations such as the UK and USA and the agency plans to release two million barrels a day for a month from its reserves to make up the shortfall caused by the Libyan conflict.

AA president Edmund King said: "Reduced fuel prices will help the general economy to recover as lower prices at the pumps means more spending elsewhere."

Sainsbury’s has already announced that it will follow Tesco’s example and cut the cost of fuel by up to three pence per litre from Friday. Asda will also follow suit, announcing it too will be cutting the cost of fuel by up to three pence per litre from yesterday. This will limit the cost of fuel at Asda stores to £1.30.7 for a litre of petrol and £1.34.7 for a litre of diesel.

Use the Myfinances.co.uk petrol price widget, powered by Confused.com, to work out your fuel costs.

Sign up to the Myfinances.co.uk newsletter to receive the latest financial news direct to your inbox.