Here’s how fuel prices could spike during November

The Bureau of Economic Research (BER) on Monday published its forecast for the week, with a warning about Brent crude oil and fuel prices during November.

According to BER, “a sudden and unprecedented surge in gas prices” could affect markets in the United Kingdom, the United States and South Africa.

A possible fuel price surge?

Increased demand for oil

BER says the demand for cheaper alternatives, including oil, has risen, especially with “liquefied natural gas becoming significantly more expensive”.

Furthermore, an energy crisis in China “also fuelled the recent coal price rally”, despite the coal price benefitting from the latest market trends.

The increased demand for oil pushed the Brent crude oil prices from $75 (R1,122) per barrel in September to $80 (R1,196) per barrel last week.

BER warns: “If sustained, the current oil price should see a notable rise in domestic fuel prices in early November”.

Impact of China’s energy crisis on fuel prices

As reported by Financial Times, Chinese manufacturers were forced to halt production in leading up to Christmas – a move that has left households without electricity.

To add to the panic experienced by authorities and local businesses, the “electricity crunch” could also open the way for Cabinet to approve electricity rates.

Meanwhile, “Beijing ordered coal miners to expand production dramatically, raising doubts about China’s promises to transition to green energy”, writes Primrose Riordan.

Exhange rates

The extent of the surge in fuel and oil prices will also be affected “on local currency moves in the rest of the month”.

That said, the rand exchange rate has been resilient so far, ending the week marginally firmer against the US dollar, despite “all the international turmoil”.

“The surging gas price solidified a growing narrative that higher global inflation could be more persistent”, the BER said in the weekly forecast.

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