July fuel price increase to be bigger than expected

Johannesburg – South African motorists will be hit with another hefty fuel price hike next month, effectively wiping out most of the fuel price relief that lockdown brought.

Commenting on unaudited month-end data, the Automobile Association is predicting a petrol price increase of R1.73 a litre from next Wednesday, July 1, while diesel is set to go up by R1.74 a litre and illuminating paraffin by R2.14.

The latest increase will drive the price of 95 Unleaded petrol up to R14.43 per litre at the coast and R15.13 inland, where the cheaper 93 ULP grade will rise to around R14.93. This is just 78 cents less per litre than this year’s price peak of R15.71 for 93 ULP just before lockdown.

This means a tank of petrol will cost between R52 and R130 more, depending on what car you drive.

While the rand has provided a bit of wind in South Africa’s petrol price sail in the preceding month, this has proven no match for the recent surge in international oil prices as the world continued to ease out of lockdown. Brent crude was trading at R41.40 at the time of writing which is around double what it cost in late March. 

"The rebound in international oil prices has been as remarkable as their fall earlier in the year,” the AA said.

“The basic fuel price for petrol and diesel in South Africa jumped from around R3 a litre on 1 May to nearly R6 a litre by 25 June”.

Although the rand gained around 34 cents to the US dollar in June, the currency was still R2.50 weaker than it was before the Covid-19 crisis hit.

"We cannot overstate the effect that the rand’s collapse is currently having on fuel users," the AA added.

"If the rand had remained at its pre-Covid-19 levels, fuel users would likely be seeing a reduction in fuel prices in the order of 75 cents a litre next month".

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