Fuel prices now around R4 cheaper than at the start of 2020
The diesel price is expected to drop again in June, while petrol price will possibly see a rise.
An increase of up to 50 cents a litre for petrol is expected for June, while diesel is heading in the opposite direction, with a decline of up to 56 cents.
This is according to the Automobile Association (AA), based on unaudited mid-month fuel price data released by the Central Energy Fund.
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In a statement, the AA said that oil prices rebounded off their late-April crash while the rand steadied around its new level, leaving a mixed picture for South African fuel users.
“In a dramatic reversal of last month’s oil swings, international product prices used to calculate South Africa’s basic fuel price have nearly doubled since their lows at the end of April,” it explained.
“Over the same period, the rand has settled in around the level of R18,40 to the US dollar, almost three rand weaker than just three months ago prior to the advent of the Covid-19 panic and multiple downgrades of our economy by ratings agencies.”
It further stated that despite this, South African motorists currently have some unusual capacity to absorb fuel price increases, with most grades of fuel around four rand a litre cheaper than at the start of 2020. Motorists are also driving far less due to the ongoing lockdown.
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“Our concern, of course, is that the financial situation of many South Africans has changed for the worse in the last two months, with massive job losses and talks of across-the-board salary cuts. This could make South Africans sensitive to even small fuel price increases,” the association commented.
It said that the differences between the movements for different fuel prices are likely to be related to imbalances in global refining capacity in the first week of May as the oil industry came to grips with the unprecedented April oversupply and price crashes.
It said it expected fuel price volatility to be substantial and long-lasting, as the world economy adjusts to the new reality of a spreading pandemic.
