South African petrol prices could reach record highs with more increases on the cards: Dawie Roodt

South African motorists are in for pain this month with petrol set to increase by 54 cents per litre this week.

According to the Department of Energy, the latest increase will bring the official inland price to R16.67 for 95 petrol and R16.49 for 93 petrol.

This is still below the highs of R17.08 in October 2018, but the weakening of the rand and higher oil prices are expected to place more pressure on the fuel price in the months ahead, said Dawie Roodt chief economist at the Efficient Group.

“This fourth increase in a row might not be the end of it and that further price hikes in the next few months were ‘highly likely’ and could take the country beyond the historically high prices notched up in the recent past,” he said.

“Increased American sanctions against Iran, one of South Africa’s major suppliers of crude oil, are definitely going to be a factor as will the rand-dollar exchange rate and the outcome of the upcoming election.

“If the rand continues to slide against the US Dollar and a shortage of crude drives up prices the result could be too horrible to contemplate,” Roodt said.

Oil

The Department of Energy attributed the latest petrol price hikes to a weakening rand/dollar exchange rate and the rising international prices of oil.

Despite the weakening of the rand over the last week, the average exchange rate used in the basic fuel price has helped to reduce rising international petroleum prices by around 13 cents per litre.

However, international oil prices, which have pushed to fresh highs over the last month, are still the overwhelming negative contributor to local fuel prices.

Global oil prices have climbed on moves by the United States to impose sanctions on countries that purchase oil from Iran, effectively removing around 1.1 million barrels per day from the market.

The oil price rallied to over $75 a barrel, before ending on news that Saudi Arabia would have more replacement barrels than would be lost from stunted Iranian production.


Read: This is the official petrol price for May

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South African petrol prices could reach record highs with more increases on the cards: Dawie Roodt