Petrol could drop below £1 a litre, the RAC has said, predicting that the tumbling oil price will bring significant discounts on forecourts in time for Christmas.

The RAC said there should be a 3p drop for petrol and 5p for diesel. This would take average prices to around 103p for petrol and 104p for diesel, but experts predicted prices would be lower at many forecourts.

RAC spokesman Simon Williams said: “We expect Britain’s supermarkets and cheapest fuel retailers to be selling petrol at £1 a litre or less in time for Christmas.

“These retailers consistently tend to be 3p to 5p a litre cheaper than the UK average price. We are still some way off the average price of unleaded reaching the £1 a litre mark but this will be a big step in the right direction.”

Tesco and Asda announced on Tuesday that they had cut petrol and diesel prices by 2p a litre, while Sainsbury’s said it would reduce its prices by “up to 2p”.

Recent savings have been attributed to oil prices slumping to a near seven-year low, with a barrel of Brent crude reaching US$41 earlier in the week. Oil producers are bracing for further dramatic falls into the $20 range.

Twelve months ago a barrel cost $65 and in June 2014 it was $115.

Williams said: “The long-term outlook is for the oil price to stay low.”

November saw a brief return to petrol being sold for under £1 a litre with Asda cutting its price to 99.7p in a three-day promotion.

The average price of diesel is already at a six-year low, having dropped to 109.18p last Friday.

With the Press Association