Public pressure: Petrol will only increase by 5c/l in September following unexpected intervention by the minister of energy. Picture: MARIANNE SCHWANKHART/THE TIMES
Public pressure: Petrol will only increase by 5c/l in September following unexpected intervention by the minister of energy. Picture: MARIANNE SCHWANKHART/THE TIMES

Energy minister Jeff Radebe has called for stable global oil prices as sharply increased petrol costs put pressure on consumers and hurt economic development.

However, oil cartel Opec has indicated it will continue to suppress global supply in the name of sustainability, even though oil stocks are in deficit.

Radebe’s comments were made at the Africa Oil & Power conference which kicked off in Cape Town on Wednesday, and come two days after he announced the government is to intervene in the rising fuel cost crisis to cap increases at the pump to 5c a litre, instead of an expected 25c for September.

The shock intervention comes after intense pressure from organised labour and opposition parties, and is meant to cushion SA consumers, who are paying R1.50 more for a litre of petrol than they were five months ago due to higher oil prices and a weaker currency.

Opec, which accounts for 60% of the petroleum trade, forced non-Opec countries in late 2016 to cut oil production by 1.8-million barrels a day in response to rock-bottom oil prices. Brent crude oil has since lifted from $50 a barrel to about $78 this week.

Price stability 

"The decisions taken to sustain higher crude oil prices over a short space of time are having a detrimental impact to our quest for economic development," Radebe said. Stability of prices is needed for predictability and better planning, he said.

Opec secretary-general Mohammed Sanusi Barkindo, said co-operation between oil-producing countries led to prices recovering thanks to unprecedented levels of conformity to production limits. A supply overhang of 370-million barrels has been reduced to a deficit of 41-million barrels, he said. Global demand is expected to reach 100-million barrels per day later in 2018. Even so, Barkindo suggested a co-ordinated rise in oil production was not yet on the cards.

"You can see investments are beginning to trickle in, but very gradually. Until we are able to get investors back in full force … I don’t think we will be able to be satisfied with what we have achieved so far," Barkindo said.

A framework agreement is in the works to ensure continued co-operation between Opec and non-Opec oil-producing nations, Barkindo said.

steynl@businesslive.co.za