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Sunday, July 14, 2024

April petrol price hikes may be smaller than initially feared, here is why

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Falling oil prices and a firming rand has helped harness the petrol price hike for April, latest data from the Central Energy Fund reveals.

Petrol and diesel prices still look set for large increases on Wednesday next week – but thanks to the two mentioned factors, it won’t be as big as previously predicted.

Current data suggest that, 95 octane petrol will increase by R1.84/litre, 93 octane is expected to climb by R1.76/l, diesel by between R2.98/l and R3.14/l and illuminating paraffin by R2.51/l.

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The expected petrol price hikes have moderated after oil price fell by $30 to $110 and the rand performed strongly against the dollar.

Earlier in March, petrol price was expected to increase by up to R2.15.

Local fuel prices are determined by international oil prices, as well as the dollar-rand value, as South Africa buys oil in dollars.

Oil prices have been soaring over the past month amid the fallout from Russia’s invasion of Ukraine. 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.

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Traders are scrambling to secure oil supplies with Russia, unable to deliver some of its oils due to shipping and banking restrictions.

But after Brent oil was pushed close to $140 a barrel earlier in the month, it has now fallen back to around $110.

The market has been encouraged by peace talks between Russia and Ukraine, as well as Russia’s offer to “fundamentally cut back” its attacks in northern Ukraine.

Read also: Lady hitch-hiker used to lure truck driver in the fatal N3 hijacking gone wrong

In addition, new pandemic lockdowns in China are expected to cool fuel demand. Millions of people in the eastern half of Shanghai are currently confined to their homes.

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The rand has also seen strong gains: it is currently trading at around R14.46/$, its best level since October last year – after almost touching R15.40 earlier in the month.

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