- By: News
- 0 comment
- Fuel prices are expected to be hiked by more than R1.70 on Wednesday.
- The oil prices have jumped over the past month, while the rand has not recovered to pre-Covid-19 levels.
- The price of 95 petrol in Gauteng hit R12.22 in May, but is now expected to climb to R15.13.
- For more articles, go to www.BusinessInsider.co.za.
A large R1.73 a litre hike is expected in petrol prices on Wednesday this week.
This is the result of a recovering oil price, and continued weakness in the rand.
The Gauteng petrol price (95) fell from R16.16 at the start of the year to R12.22 in May thanks to the oil price slump – before rising again to its current level of R13.40.
The expected hike will push it to R15.13. The diesel price will be hiked by R1.74, according to an estimate by the Automobile Association. This should push diesel prices to around R13.04.
In April, oil plunged to a 21-year low after a slump in demand amid the coronavirus outbreak.
But after dipping below $17 a barrel in April, Brent is now trading around $38. Prices started to rally last month amid signs of an economic recovery worldwide.
“The rebound in international oil prices has been as remarkable as their fall earlier in the year. The basic fuel price for petrol and diesel in South Africa jumped from around R3 a litre on 1 May to nearly R6 a litre by 25 June,”
While the rand strengthened by 34c against the dollar so far during June, it was still R2.50 below levels seen before the Covid-19 crisis.
“We cannot overstate the effect that the rand’s collapse is currently having on fuel users: if the rand had remained at its pre-Covid-19 levels, fuel users would likely be seeing a reduction in fuel prices in the order of 75 cents a litre next month,” the AA said.
International crude oil prices have continued to advance, setting the stage for extraordinary fuel price hikes despite rand strength during June. This is according to the Automobile Association which was commenting on unaudited month-end fuel price data released by the Central Energy Fund.
The AA expects that illuminating paraffin will increase by R2.14 this week.
“This will be an especially huge blow to citizens who use paraffin for cooking, lighting, and especially heating during winter,” the association notes.