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Based on current statistics, fuel price increases are expected by the end of October for November 2021. The Automobile Association (AA) stated this is due to the latest currency rate and commodity statistics.
According to the AA, the current picture shows fuel up 99 cents a litre and diesel and illuminating paraffin up by a considerable R1.42 a litre.
This will drive 95 ULP inland above R19/l (around R19.30/l) and diesel above R17/l. Furthermore, the price per litre of inland fuel (95 ULP) will rise from R14.86/l in January to R19.30/l in November – a 30% increase in 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,” the AA says, adding that it sees little hope of recovery until the end of October.
Moreover, according to the AA, Brent Crude has broken through the 85 US dollar per barrel level, and the basket of oil prices used to determine South Africa’s oil price is rising in tandem with Brent. “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 Association notes.
According to the AA, the oil price pressure will not ease in the medium term, especially as demand for oil rises as the northern hemisphere approaches its winter season.
It claims that the Rand is still much above its June level of less than R13.50 to the dollar and that the roughly 15-month increasing trend was abruptly reversed in June.
The AA noted that there is also ambiguity over adjustments to the Slate Levy. “The under-recovery to date this month has been vast, and the government will, in our view, have no option but to increase the Slate Levy to recover this deficit, making for a bigger hike,” it comments.
The AA concludes, “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.”
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