Fuel prices are expected to rise further in October, primarily due to the sharp rise in crude oil price, warns independent economist Fanie Brink.
Citing information published by the department of energy on Tuesday, Brink said that the price of gasoline 93 (ULP & LRP) in Gauteng could rise by 26.3 cents per liter on Wednesday, 4 October.
The price of diesel is also expected to rise by 37.8 cents per liter.
Brink said that this rise directly correlates with the average daily Brent crude oil price, which increased from $52.34 to $59.22 a barrel over the past month – the highest level since June 2015.
While South Africa’s weak rand plays a part, Brink said that the increase was primarily supported by Turkey and its threat to cut the crude oil being transported by a pipeline from Iraq to the outside world.
Hurricane Harvey also caused the USA to close almost 25% of its refining capacity, while the rough sea caused by Hurricane Maria had also delayed the transport of crude oil along the North Atlantic coast.
“The higher crude oil price has resulted in sharp increases in the average international prices of petroleum products, which could cause possible increases of 33.2 cents per liter in the gasoline price and 44.8 cents per liter in the diesel price,” said Brink.
“The daily average R/$ exchange rate strengthened R/$12.75 during the first week of September and subsequently weakened again to R/$13.28, but it is expected that the price of gasoline will decrease by 6.9 cents per liter and the diesel price by 7 cents per liter.”