The falling oil price could lead to petrol and diesel being sold at forecourts for as little as 86p/litre – less than the price of a litre of water – RAC has predicted.

Since the start of December, the price of oil has dropped by 30%, from $43.26 (£30.09) to a 12-year low of $30.06 (£20.91) on Monday. However, the pound has weakened against the dollar by 4.5% over the same period.

The RAC said if the price of oil falls to $10 a barrel, as some analysts are predicting, could pave the way for fuel to be sold at 86p/litre, on the assumption the pound does not weaken any further against the dollar.

However, RAC said there is a limit on how low pump prices can fall to, as the fuel duty (57.95p/litre) and VAT still make up the majority of fuel prices. “Even if the fuel was given away and the retailers didn’t take a margin, the price of a litre would still be 70p,” RAC fuel spokesman Simon Williams said.

“With no apparent end in sight to the freefalling price of oil, motorists can expect some really low fuel prices in 2016,” Williams added. “Breaking through the pound a litre price point for both petrol and diesel was clearly a welcome landmark, but it looks as though there is more to come. In fact we may get to a bizarre time when a litre of fuel is cheaper than a litre of some bottled waters.”

According to Government data, the average price of petrol was 101.8p/litre and diesel was at 103.4p/litre on Monday.