Petrol prices could fall by as much as £1.50 a tank if wholesale price falls trigger a supermarket price war, the AA says.
After 12 weeks of consecutive rising pump prices, both diesel and petrol are currently at a four-year high.
However, wholesale petrol costs have slumped 3p a litre in the past month, suggesting a supermarket pump price war could be on the way.
Petrol hit 131.38p a litre on Tuesday – the highest price seen since July 2014, according to the AA.
On the same day, the average price of diesel reached 134.39p - the highest since August 2014.
Over the past month, the average price of petrol has risen 1.8p to 131.32p while diesel has gone up by 2p a litre to 134.35p.
Supermarkets are now averaging 128.1p a litre for petrol, while oil company and other retailers average £132.7p.
But a strengthening pound and falling refining margins should force a correction in pump prices providing retailers choose to pass on the savings, the AA says.
Luke Bosdet, the AA’s fuel price spokesman, says: “Drivers were told earlier this month that there was ‘no end in sight’ to rising pump prices. Now, they should be looking for a £1.50-a-tank cut in petrol costs.
“The key question is to what extent and how quickly the fuel retailers decide to pass on the savings. In the past, such a significant drop in wholesale prices would have triggered a pump price battle among the supermarkets. For the moment, drivers should keep an eye out for competitive oil company sites taking the opportunity to undercut expensive supermarket sites.”
There is growing speculation that the fuel duty freeze that has been in place for the past eight years could be scrapped in this year’s budget.
Earlier this month, Chancellor Philip Hammond told MPs that previous analysis showing the benefits of the freeze on fuel duty against tax losses would “have to be looked at again in the context of the economy today".