South African fuel prices are set to climb in October in the wake of the mid-September drone attacks on the Abqaiq oil refinery in Saudi Arabia.
This is according to the Automobile Association (AA), which says that although oil prices ticked up in the first two weeks of September, the impact of the attacks caused a further sharp price spike.
The current picture predicts an increase of around 19 cents a litre for 95 octane petrol, with diesel set to rise by 25 cents and illuminating paraffin by 24 cents.
93 octane petrol is bucking the trend though, and will decline by four cents a litre.
“The landed price of fuels in South Africa jumped by as much as a rand a litre in just three days after the attack, before settling back slightly. This turned a generally stable price picture into a negative one,” the AA said.
The association said that the rand performed fairly strongly against the US dollar during much of September, helping to offset some of the impact of increased oil prices.
“Without the rand’s performance, we could have been looking at price rises in excess of 40 cents a litre for some fuels,” the AA said.
The association echoed its mid-month warning that large oil refineries and storage depots had now proven difficult to defend against sneak attacks, and repeated its concern that copycat attacks could lead to further unpredictable price shocks for liquid fuels.
“South Africa’s transport economy is underpinned by liquid fuels and is extremely vulnerable to price impacts and fuel shortages. Government should urgently prioritise mitigations to protect against the potential of conflict-related instability in oil supply and pricing,” it said.
Bianca Botes, treasury partner at Peregrine Treasury Solutions, warned that the rand could be in for further weakness.
“The week ahead once again leaves us at the mercy of the global environment, with markets keeping a keen eye on unfolding events such as the motion to impeach president Trump, calls for Boris Johnson to step down and the ongoing trade dynamic between the US and China.”
“The rand has moved towards a leg weaker, with the new target level being set at R15.06/$, with a break above this signalling a new bout of weakness that could see the currency target R15.20,” Botes said.
Here is how the current fuel price adjustments could reflect for October:
|Fuel (Inland)||September Official||October Expected|
|0.05% Diesel (wholesale)||R14.59||R14.84|