Surging oil prices threaten to put a dent in expected fuel price decreases

Surging oil prices and the increased rand exchange rate threaten to put a “dent” in any expected price decreases in September. 

Earlier this month, data from the Central Energy Fund data indicated that motorists could expect more fuel price decreases in September, but recent rises in both oil and the rand exchange rate could impact the reduction.

As reported by The South African, data showed that the would be a R2.63/l drop in the retail price of 95 octanes unleaded petrol, a R2.48 drop for 93 unleaded, and a R2.37 drop in the wholesale price of diesel in September.

Here’s a look at the mid-month update:

  • Petrol 95: would drop by 260 cents per litre
  • Petrol 93: would drop by 244 cents per litre
  • Diesel 0.05%: would drop by 230 cents per litre
  • Diesel 0.005%: would drop by225 cents per litre
  • Paraffin: would drop by 193 cents per litre

However, the rand has depreciated substantially in the week since those figures were released. Previously, the exchange rate was R16.17/$, but at the time of publishing, that rate is now R17.04/$.

Also read: More fuel price decreases expected in September

TWO significant factors are influencing petrol price fluctuations

These are the international prices of petroleum products, primarily determined by oil prices and the rand/dollar exchange rate used to purchase these products.

Oil prices

Ten days ago, Brent crude was trading around $93.71 per barrel. However, that price has since risen to $99.90. If this trend continues, the petrol price decrease may not be as significant as initially predicted. Oil prices peaked in June at $117 per barrel before falling to around $105 in July.

Exchange rate

For months, the rand has been working against domestic fuel prices, with its weaker market position undermining the benefits of lower global oil prices. The rand remains vulnerable to changes in the global economy, and any shift in sentiment could cause the currency to fall affecting the exchange rate. The final overall price decrease will be confirmed (hopefully) later this month, with the new price taking effect at midnight on Tuesday, September 6th.

Until then, let’s wait and hope this blows over.

Source: thesouthafrican.com

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