Three of the country's biggest supermarkets have said they will pass on lower oil prices to customers, sparking a potential price war at the petrol pumps.

Asda began with an offer of a 3p cut, to be followed by Wm Morrison offering 4p off. Sainsbury's said its petrol would be 5p cheaper, but only to customers spending £50 or more.

The three were apparently responding to a similar offer of a 5p reduction instituted by Tesco, the UK's biggest grocer, to shoppers spending £50.

David Miles, Asda's trading director, said: "We are seeing a more stable reduction in oil prices, allowing us to pass on the savings to customers."

The price of oil has dropped from a peak of nearly $147 a barrel earlier this month to over $130.

However, prices are in danger of creeping back up as oil producers in the Gulf of Mexico began to gear up for the first major storm of this year's hurricane season.

Oil prices in London Brent crude rose $2.42 to $132.61 on fears that Hurricane Dolly, due to hit on Wednesday, will disrupt oil production. US crude also rose, up $2.16 to $131.04.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax