Brace yourself, South Africa. We’re about to witness the breaking of a record… and the breaking of our budgets.
The Automobile Association (AA) has warned that current data supplied by the Central Energy Fund indicates that fuel prices will soon touch R24 per litre for petrol and R23.60 per litre for diesel.
“If realised at month-end, these will be the biggest increases to fuel prices in South Africa’s history and will, undoubtedly, have major ramifications for all consumers and the economy in general,” says the AA.
“We must note, though, that this is the mid-month outlook, and oil prices are for the moment, see-sawing significantly so there may yet be some relief before the official adjustment by the Department of Mineral Resources and Energy is made going into April.”
Thanks to Russia’s invasion of Ukraine, international oil prices have been soaring.
When the United States announced last week that it will ban the import of Russian crude oil, Brent oil’s price increased. Since then, negotiations between Russia and Ukraine have started which meant the price of Brent oil dropped a bit.
In the meantime, China has also announced that some of its cities have gone into lockdown again. This will mean a drop in fuel demand.
News24 reports that Russia is the world’s third-largest producer of crude oil, and the expectation that it will be locked out of the market has caused a surge in oil prices. Traders are scrambling to secure oil supplies with Russia, unable to deliver some of its oils due to shipping and banking restrictions.
South African fuel prices are determined by international oil prices plus the rand-dollar value. That’s because we buy oil in dollars.
Image credit: DNA India