Fuel prices are expected to show big increases in December as a result the continued rise in the crude oil price and the further weakening of the exchange rate.
Citing the latest information from the Department of Energy, the prices of petrol 93 (ULP & LRP) in Gauteng on Wednesday, 6 December 2017 could rise by as much as 71.9 cents per litre, while the price of diesel with a 0,005% sulphur content is expected to increase by 61.1 cents per litre, said independent economist, Fanie Brink.
According to international sources, the average daily Brent crude oil price has increased in November to its highest level since June 2015, at $64.27 per barrel.
Because of further increase in the crude oil price, it is expected that the average international price of petrol may rise by 45.7 cents per litre and the diesel price by 34.3 cents per litre, the economist said.
The daily average R/$ exchange rate has weakened over the past month from about R/$13.80 to R/$14.20 due to political uncertainty and further economic deterioration that caused a further downgrading in the country’s credit status last week.
This weakening in the exchange rate is expected to result in an increases of 26.2 cents per litre in the petrol price and 26.8 cents per litre in the diesel price, Brink said.
Analysts pointed to continued volatility in local trading, following the decisions of rating agencies S&P and Moody’s late last week.
Bianca Botes, corporate treasury management at Peregrine Treasury Solutions said that all eyes will remain on the local political landscape to determine whether or not Moody’s will downgrade South Africa, with volatility and downward pressure on the rand to be expected.
This comes after S&P downgraded South Africa on Friday evening, while Moody’s placed South Africa under downgrade review and indicating that the December conference will set the tone for their decision.
Soon after the downgrade the rand weakened to R14.15, but gained some ground leading to Monday, trading at R14.07. In morning trade on Monday however, the rand firmed 1.11% to R13.99 against the dollar.
The final fuel price changes are expected to be announced by the energy minister by the end of the week.
|Fuel||November official||December expected|
|0.05% Diesel (wholesale)||R12.36||R12.97|