Motorists across Mzansi should gear up for another painful fuel price hike come July, as global oil markets reel from heightened geopolitical tensions in the Middle East.
The Central Energy Fund’s (CEF) latest data shows under-recoveries of 43 to 46 cents per litre for petrol and a steep 69 to 71 cents for diesel. But with global oil prices climbing rapidly, actual increases could be even worse than the current estimates.
This potential surge follows military action by the US and Israel targeting Iranian nuclear facilities, triggering fears of a broader regional conflict. Iran’s retaliatory strike on a US base in Qatar has only added fuel to the fire, literally.
At the start of June, Brent Crude was trading at around $62.94 per barrel, but it spiked to $74 by June 20. Though it dipped slightly to $69.10 on Sunday, the market remains on edge. Any further escalation – particularly a threat to the critical Strait of Hormuz, which transports a fifth of the world’s oil – could send prices skyrocketing.
“If Iran decides to choke off the Strait of Hormuz, the whole game changes,” said Bjarne Schieldrop, commodities analyst at SEB. “Right now, markets don’t seem to think that’s likely, but anything can happen.”
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Iran is currently the ninth-largest oil producer globally, exporting nearly half of the 3.3 million barrels it produces daily. Analysts suggest US strikes may have curtailed Iran’s military response options, but the risk of regional blowback remains high.
With oil price volatility this extreme, fuel price forecasts are tough to nail down. But if current trends continue, SA motorists could see petrol jump by over 60 cents per litre, and diesel by 80 cents or more when the Department of Mineral Resources and Energy announces the official prices next week.
Brace yourselves, Mzansi. July might hit harder at the pump than we expected.
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