Second consecutive record drop in fuel prices on the cards
This potential fuel price drop comes amid the lockdown when many motorists' cars are sitting idle at home
IN news that would ordinarily have seen motorists jumping for joy, South Africa could see another record drop in the price of some fuels.
This is according to the Automobile Association (AA), commenting on unaudited mid-month fuel price data released by the Central Energy Fund.
The massive drop in fuel prices could see petrol down by a staggering R1.89/litre, illuminating paraffin dropping by R1.88/litre and diesel by R1.17/litre.
According to the AA, it is ‘globally destructive economic instability’ that has pushed fuel prices into ‘drastic retreat’.
The association also said other factors that initially activated the plunge in oil prices before the Covid-19 pandemic have now been resolved.
‘The spat between Russia and Saudi Arabia has ended with an agreement, which is expected to see global oil production reduced by nearly ten million barrels a day in a bid to support oil prices,’ said the AA.
‘However, it may be a case of too little, too late.
‘World commerce has all but collapsed in the wake of the Covid-19 pandemic.
‘Even assuming a fairly rapid end to the pandemic, it will take many months for the global economy to work up a new head of steam, and possibly years before it returns to pre-Covid-19 levels.
‘Barring further shocks, we expect it to be a long while before substantial oil price hikes are a reality.’
Not even the rand’s crash against the US dollar has been enough to offset the steep decline in oil prices.
‘The rand has gone from an average exchange rate against the US dollar of R15.65 on 2 March to its current level of around R18.25.
‘In any other circumstances, a crash of 17% in six weeks would see South Africans facing a massive fuel price hike.
‘Instead, we are set for another large drop.’
The AA did, however, caution that the market remains highly volatile and these figures could be very different by month-end.
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