BASED on an unaudited mid-month fuel price data released by the Central Energy Fund, The Automobile Association (AA) predicts a massive fuel drop at month end.

This is despite weakness of the rand against the US Dollar and more due to the fact that international petroleum prices retreated.

According to AA, petrol may go down by approximately R1.11 a litre, while diesel goes down by R1.10, and illuminating paraffin by R1.18.

But due to the 25 cent increases to the fuel levels which were announced in the budget speech. This comes into effect in April.

With this adjustments, petrol is looking at 86 cents, while diesel down to 85 cents. They state that levies are not applied to paraffin.

“As the spread of the Covid-19 virus accelerates across the globe, world financial markets have plunged, with capital fleeing to safe-haven assets. The Rand has been sharply weaker against the dollar on this trend,” the AA says.

“However, this has happened side-by-side with Saudi Arabia’s decision to break ranks with OPEC. Not only has Saudi Arabia slashed its crude prices, it has also increased production substantially.”

The AA says Saudi Arabia’s actions come at a time where global oil demand is in decline as the Covid-19 virus hits manufacturing and commerce, leading to a steep slump in the oil price.

“The last time oil prices dropped this suddenly was in the first Gulf War, almost 30 years ago. However, it means good news at the pumps for South Africans.

The AA says it doesn’t believe the declines will end at their current levels.

“There is little indication of what the final picture of Covid-19 spread will be, nor where the Rand will stabilise against the dollar. It can also not be predicted how long the Saudis are prepared to hold out in their oil price war, since their oil industry is believed to be able to maintain profitability at substantially lower per-barrel prices than the current level,” the AA notes.

The AA says it foresees an extended period of turmoil.

“It will take quite some time for the global economy to get back on an even keel after the current ongoing events, and the next two or three months seem set to provide some fuel price relief to hard-pressed motorists,” it concludes.

One motorist, Peter Govender said: “With everything that is going on, can we even fully enjoy this potential drop? Its good news for sure, but I guess we need to appreciate the small wins in whatever ways we can.”