The AA says R20 a litre for petrol is now a realistic scenario before the end of 2021.
The AA says R20 a litre for petrol is now a realistic scenario before the end of 2021.

Motorists could be hit with “catastrophic” fuel price hikes next month as a result of increasing oil prices, warns the AA.

In its mid-month outlook the association expects petrol to rise around 99 c/l with diesel and illuminating paraffin increasing by R1.42 /l when fuel prices are adjusted on November 3.

This would push 95 unleaded petrol inland to a record R19.32/l — a 30% increase since January — and the wholesale price of 50ppm diesel to R17/l — also the highest ever.

“The hikes in diesel and illuminating paraffin would be the largest in SA history, bearing in mind that this is only based on half a month’s data.”

It says R20 a litre for petrol is now a realistic scenario before the end of 2021, adding that it sees little hope of improvement before the end of October.

“Brent Crude has broken through the $85 per barrel mark and the basket of oil prices used to calculate SA's oil price are following Brent higher. We note the concern this is generating in the US, where President Joe 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 Association doesn’t expect the oil price squeeze to ease in the short term, as the demand for oil will increase as the northern hemisphere enters its winter season.

A weakened rand will contribute to fuel price hikes, the AA says, with the average rand-dollar exchange rate moving from about R14.55 to R14.90 in the period under review.

The AA says there is also uncertainty regarding changes 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 says.

Fuel prices are adjusted on the first Wednesday of every month by the department of mineral resources and energy.  

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