SUPERMARKET price wars have driven the cost of diesel to consumers to - less than 98p a litre - a six- year low.

Asda was the first of three of the country's biggest retail chains to drop diesel prices. They cut a litre of diesel by 2p to a six-year low of 97.7p, while unleaded remained at 99.7p per litre. Asda said these are the maximum prices motorists will pay at all of its 279 UK filling stations.

The cost of plummeting prices on the North Sea oil industry has prompted the prime minister to set up an oil support group to help deal with the issues.

The group will be chaired by Oliver Letwin, minister for government policy, but is also expected to include Fergus Ewing, the Scottish National party business minister in the Edinburgh government.

Anna Soubry, UK business minister, who will also be a member of the group, said: “The oil and gas industry has been a big contributor to the UK economy but as the price of oil continues to tumble to new lows, this will be a difficult time for the industry.

“We are determined as a government that we do all we can to help this important sector weather the current global economic storms, which is why we’re setting up this cross-government group.”

Oil & Gas UK, the industry group, said it would welcome the initiative if it showed that senior ministers were considering ways to support operators, but also called for changes to the licensing and taxation system surrounding the oil industry.

An announcement on whether Aberdeen will get a £3 billion City Deal is expected in the next fortnight.

The news comes after First Minister Nicola Sturgeon wrote to the Prime Minister for the Aberdeen City Deal to be agreed as a matter of urgency and made an offer for a 50:50 split between Scottish and UK Governments to fund the deal.

The City Deal would cement Aberdeen’s position as a global oil and gas hub, as well as providing a boost for transport, housing and digital projects.

After Asda's announcement Tesco, Britain's biggest retailer followed suit, with an identical cut in the cost of diesel at all of its 500 filling stations across Britain by midday.

Morrisons said it would cut its prices from 3pm, cutting the price a diesel by a further 2p per litre, after becoming the first retailer to bring the price down below £1 per litre earlier this month.

An oil glut has pushed crude prices down 30 percent since early December, with Brent crude sinking to less than $27 (£18) a barrel earlier this week. On Friday, it recovered to above $30 a barrel.

Following the initial announcement by Asda, RAC fuel spokesman Simon Williams said: “We would have liked to have seen a cut sooner, and one that goes further, to more closely reflect the price retailers have been buying diesel for, but this is nevertheless good news for motorists and of course businesses that run their fleet vehicles on diesel. Diesel has been sold on the wholesale market for less than unleaded petrol since early last month, yet drivers have had to wait more than six weeks for this to be only partially reflected at the pumps.

Asda’s senior petrol director Andy Peake said the supermarket was ‘delighted’ to "take diesel to its lowest price level in over six years."

A recent study by FairFuelUK found that, since May last year, oil prices have fallen by more than 54% but retailers have only cut pump prices by 35%.

The report said retailers' profit margin for diesel is 11p per litre compared with just 5.8p per litre for petrol.

A PetrolPrices.com spokesman said: "We said earlier this week that we’d like to see the next round in the supermarket fuel price war soon, and our wish has been granted – just in time for the weekend.

This time around, it’s diesel drivers who will benefit the most. Despite lower wholesale prices, many forecourts have kept diesel at a higher price than unleaded – and our own data shows the average “per litre” cost of diesel remains just slightly above that of unleaded.

"Diesel drivers will no doubt be pleased to see the focus return to them. After a brief period last year where average diesel prices dropped below those of unleaded, the UK’s seemingly natural order of things seems to have returned. Hopefully, lower diesel wholesale prices will continue to be reflected at the pumps now that the supermarkets have mixed things up a bit."