Good news for South African motorists is that fuel prices are expected to drop next month. According to the AA, 95 Octane petrol will decrease by around 13 cents a litre, with 93 Octane petrol and both grades of diesel by four cents, and illuminating paraffin by three cents.
“Ongoing declines in the price of oil since the second week of the year will give South African fuel users a breather for February,” says the AA, which was commenting on unaudited month-end fuel price data released by the Central Energy Fund.
“Rising tensions between the US and Iran in the opening days of 2020 sparked a sharp increase in international oil prices, but the commodity has rebounded quickly. In fact, the oil price has returned to a level we might have expected had the US-Iran flare-up not taken place at all,” the AA says.
Oil has dipped to its lowest level since the start of December. However, the rand/US dollar exchange rate is steadily moving in the opposite direction, with the rand having softened from its January 1 level of about R14.05 to the dollar to its current average of R14.30.
“We have some concerns over this ongoing weakening in the absence of any overt rand shocks,” the AA says. “It is not a good sign of confidence in the South African economy.”
“We’re pleased fuel prices have managed to tread water at the start of a year, a year which is likely to again be extremely economically challenging,” the AA concludes.
The new year started with a reprieve for drivers of petrol cars when fuel prices dropped, though diesel owners were hit by a 9c/l increase.
However, all motorists are paying substantially more for fuel than they did a year ago. Inland pump prices are now R16.16 for a litre of 95 octane unleaded petrol and R14.67 for 50 ppm diesel.