Oil price above $75 a barrel means fuel price hikes for SA

Rising oil prices are likely to lead to fuel price hikes in October, the Automobile Association (AA) says.

“We have noted oil prices spiking above $75 a barrel in recent days, and the upward trend has been evident throughout September,” the AA said.

“Brent Crude in particular has increased $10 a barrel in less than a month, and the Mediterranean and Singapore prices used in SA fuel pricing are also on the advance. This trend could point towards substantial future fuel price increases,” it added.

The rand-dollar exchange rate was flat for much of the first half of September, with movements in a fairly limited range. However, recent weakening, combined with higher international petroleum prices, could push fuel prices into negative territory by month end.

“Until the government manages domestic policy more effectively, the rand will continue to expose South Africans to the full brunt of bullish oil prices, meaning South Africans are not getting fuel as cheaply as they could be,” the association said.

The AA is unable to provide a more detailed outlook for the price movements of fuel for October beyond fluctuations as indicated above, as the department of mineral resources and energy is withholding the daily fuel updates it publishes on the website of the Central Energy Fund (CEF), and through daily emails.

The department has indicated that in future, it will only publish that update at the end of the month, at which time the AA would be better placed to comment further.