There may be a big petrol price this July according to the Automobile Association after the latest data by the Central Energy Fund was released.
Motorists may have a slight breather in July after several petrol hikes in 2019. The central energy funds latest data shows that there may be some petrol price relief this July due to lower international oil prices throughout June. These oil prices have set up a substantial fuel price drop for July, and the reduction could have been greater had it not been for the Rand.
The AA said in a statement: “We are expecting petrol to drop by 86 cents a litre, diesel by 68 cents, and illuminating paraffin by 58 cents.
According to the latest data, June was the weakest month for oil in the last quarter, with crude briefly slipping below $60 to the barrel at mid-month. However, renewed tensions in the Middle East and a downturn in USA oil inventories have put pressure on the commodity, which has ticked up over the past few days.
In South Africa, a damaging spat over the mandate of the Reserve Bank sent jitters through investment markets. In the wake of the fracas, Rand’s daily exchange rate against the US dollar spiked by more than 60 cents.
“Although the currency re-strengthened against the dollar towards month-end, the exchange rate average for the month is negative by about 11 cents, meaning fuel users missed out on an even bigger drop,” said the AA.
The Rand is currently trading at R14.17 to the dollar, R17.95 to the pound and R16.11 to the euro.
The AA predicts that the prime driver of fuel price movements for the third quarter of 2019 is likely to be the oil price. It said that current tensions between the USA and Iran could have severe ramifications on oil prices, which will affect petrol prices in months to come.
“South Africa’s economy would be very badly affected if, as earlier in the decade, we were to return to sustained prices in excess of $100 per barrel. In such an environment, any event which affected the Rand markedly would have a dire effect on fuel users,” said the AA.