Big fuel price hike predicted for the end of October

The AA publishes these forecasts to alert the public of looming changes to fuel prices, and the reasons for the changes, along with the information relating to fuel price adjustments and providing context for them.

The current picture is showing petrol up by 99 cents a litre, and diesel and illuminating paraffin higher by a whopping R1.42 a litre.

This will push 95 ULP inland above R19/l (close to R19.30/l), and R17/l for diesel.

Taking this potential increase into account, the price of a litre of fuel inland (95 ULP) will have increased from R14.86/l in January to R19.30/l in November – a 30% increase over 11 months.

“The hikes in diesel and illuminating paraffin would be the largest in South African history, bearing in mind that this is only based on half a month’s data. R20 a litre for petrol is now a realistic scenario before the end of 2021,” says the AA, adding that it sees little hope of improvement before the end of October.

Brent Crude has broken through the 85 US dollars per barrel mark and the basket of oil prices used to calculate South Africa’s oil price are following Brent higher.

“We note the concern this is generating in the USA, where President Biden was reported to have called on the OPEC+ cartel to increase oil output to stabilise prices. This has not generated a response from OPEC+, and our view is that a response is not likely, since the current price pressures are beneficial to the cartel’s members,” the AA notes.

The AA further said that over the first half of October, the average Rand / US dollar exchange rate jumped from around R14.55 to the dollar to R14.90.

It says the Rand is still far above its June level of below R13.50 to the dollar but that the strengthening trend lasting nearly 15 months was abruptly reversed in June.

“South Africans are paying at the pumps for weak governance, as one of the key indicators of the price of fuel depends on the exchange rate,” the Association concludes.