Petrol prices are expected to climb this coming November, breaking a five-month trend of continued reductions.
Prospects aren’t much better for diesel users, either, as the less refined fuel is also set to increase by a similar amount.
These values are based on the latest data from the Central Energy Fund (CEF), which predicts that fuel prices will be hiked on account of rising international oil prices.
The price of Brent Crude oil shot up to $80 per barrel in mid-October amidst concerns that Israel’s then-imminent retaliatory attack against Iran would target its oil fields, affecting the global supply.
However, Israel’s attack turned out to be far more limited and avoided Iran’s oil facilities, leading to a subsequent drop in oil prices down to $73 per barrel, though this is still higher than the average rate through September.
As a result, this is how fuel prices in South Africa are expected to be adjusted in November:
- Petrol 93 – Increase of 17c a litre
- Petrol 95 – Increase of 28c a litre
- Diesel 0.05% – Increase of 23c a litre
- Diesel 0.005% – Increase of 21c a litre
It must be said that these figures are still an approximation and not the official adjustments that will be made by the Department of Mineral Resources and Energy on Wednesday next week
International events could still alter the trading price of oil, as well as domestic factors like a change to the Slate Levy, taxes, or wholesale and retail margins.
It’s not all bad news
The increase in petrol prices is expected to be a temporary setback to an otherwise positive trend South Africa has been experiencing for most of 2024.
Oil demand from the world’s two largest consumers, the USA and China, is expected to be subdued in the coming months.
According to Daily Investor, China’s economy in particular is experiencing a slowdown and is unlikely to meet its GDP growth target of 5%, which should reduce demand for the liquid gold.
At the same time, the Organization for Petroleum Exporting Countries (OPEC) member states are loosening their supply caps out of fear of losing market share to competitors like the United States, which would put the oil-dependent nations under financial pressure.
Saudi Arabia has signaled its support for removing its supply cap at the end of the year, and OPEC is scheduled to meet at the start of December to discuss its output strategy for 2025.
It’s also possible that petrol prices could still be reduced in November, given that oil rates are quickly stabilizing now that Israel’s strike against Iran was revealed to be far more limited in scope than initially anticipated.
However, one uncertain factor is the impending US elections on 5 November, which could potentially lead to the dollar strengthening against the rand, making oil more expensive to import.
That being said, the rand has also been on a generally positive trend in the latter half of 2024 since the election of the new Government of National Unity, which has re-established confidence for investors in South Africa.
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