According to unaudited data released by the Central Energy Fund, the AA said that declining international oil prices during most of June had played a significant part in the projected decrease, although more reprieve at the pumps could have been enjoyed had it not been for the weaker Rand.
“June was the weakest month for oil in the last quarter, with crude briefly slipping below $60 to the barrel at mid-month. However, renewed tensions in the Middle East and a downturn in USA oil inventories have put pressure on the commodity, which has ticked up over the past few days,” the AA said.
“Meanwhile, on the home front, a damaging spat over the mandate of the Reserve Bank sent jitters through investment markets. In the wake of the fracas, the Rand’s daily exchange rate against the US dollar spiked by more than 60 cents. Although the currency re-strengthened against the dollar towards month-end, the exchange rate average for the month is negative by about 11 cents, meaning fuel users missed out on an even bigger drop”.
Despite this, the AA said it still expects the price of petrol to drop by 86 cents a litre, diesel by 68 cents and illuminating paraffin by 58 cents. This, after previously putting the respective falls at 91, 70 and 62 cents.
It however warned that, “The prime driver of fuel price movements for the third quarter of 2019 is likely to be the oil price. The current tensions between the USA and Iran could have severe ramifications. South Africa’s economy would be very badly affected if, as earlier in the decade, we were to return to sustained prices in excess of $100 per barrel. In such an environment, any event which affected the Rand markedly would have a dire effect on fuel users”.
By mid-morning on Thursday (27 June), the national currency was trading at R14.19 to the US Dollar with Brent Crude Oil at $65.28 a barrel.
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