Asda renews price war at the pumps as cost of oil falls again

Asda has fired the latest salvo in the petrol price war raging among the big supermarkets, providing a welcome boost to hard-pressed consumers.

Britain's second-biggest supermarket said it would cut prices by 2p a litre across the UK from tomorrow, which means its customers will not pay more than 132.7p a litre for petrol and 136.7p for diesel at all its 188 filling stations.

Morrisons said it was also knocking 2p off a litre of petrol and 1p off diesel at "most" of its forecourts, while Tesco hit back by reducing its prices by 1p per litre at the "majority of our petrol stations".

The move by the big grocers followed a sharp drop in the price of Brent crude oil in London yesterday, which fell to $105.60 a barrel after opening at $108.50. Tesco kicked off the latest price spat by slashing 3p from a litre of petrol and diesel on 24 June, following a fall in the cost of oil internationally driven by the releasing of more reserves by the International Energy Agency.

However, speculators quickly then drove up the wholesale price in themarkets.

The price of a litre of petrol peaked at 137.43 a litre on 9 May, while diesel hit 143.04 the same day.

Since then, the big grocers have been using both prices and promotions to fight for customers in what supermarket chief executives and analysts have described as the toughest trading for more than 30 years.

For instance, Tesco is running 5p off a litre of petrol when customers buy a 24 pack of coke cans until 14 August among other offers, while Sainsbury's at the end of last month offered 10p off a litre when shoppers spent £60 or more in store.

Yesterday, Jeremy Walton, Asda's head of petrol trading, said: "Unlike others, our price cuts the same across the country, meaning no one will pay a premium for their petrol." Mark Todd, the director of petrol at Morrisons, said it "started bringing down prices last Friday in response to a fall in wholesale costs and we can now bring down prices further this week". Sainsbury's said "We will be closely monitoring our competitors's prices".