The Automobile Association warned motorists on Friday to brace themselves for a huge fuel price hike in June, with further spikes in the coming months.
The warning comes hours ahead of the official announcement of the fuel price adjustments that will kick in on June 1.
The AA said in a statement fuel prices are set for a sharp jump at the beginning of June, with the potential of further rises in the medium term.
Commenting on the unaudited month-end data supplied by the Central Energy Fund (CEF), the AA said the pump price for a litre of petrol is set to increase by 52 cents, while illuminating paraffin and diesel are set to go up by 61c/litre and 78c/litre respectively.
The reasons for the spike are the continued upward march of international petroleum prices in May and the weakening rand / US dollar exchange rate.
The combination of firmer oil and weaker rand has exposed the consumer to the full force of oil’s strength, the AA said.
On Friday before midday thew rand was R15.55/$ and Brent crude oil was selling for $48.73 a barrel. On Thursday world oil prices breached the $50/barrel mark for the first time in oer six months on signs that the surplus are coming to an end.
The AA expressed concern over the steady rise in oil prices in the current weak rand environment, notwithstanding international opinion that global over-supply could see prices pull back.
The AA said according to the Department of Energy, crude oil benchmarks have rallied since late April due to issues regarding geopolitical concerns affecting the market. Reductions in output in Nigeria, Columbia and the US contributed to the surge in prices during the past month.
The AA said the department noted that “an energy crises in Venezuela, where power outages due to a drought and subsequent reduction in power generation at the country’s main hydropower facility, was beginning to effect the wider economy including operations in the oil and gas sector”.
The recent wildfires in Canada also reduced crude oil exports to the US, forcing the county to draw on inventories.
“With South Africa’s weak economy, our concern is that even if oil prices moderate, further declines in the rand will mask the benefit. It is possible that fuel prices will test new highs in the coming months, placing yet more stress on consumers,” the AA said.