Bad news about petrol prices

The fuel price adjustments for August have taken a turn for the worse, with recoveries dipping into the red next month.

This is according to data from the Central Energy Fund (CEF) for the third week of July, indicating that the renewed tensions in the Middle East have taken their toll on South Africa’s fuel price recoveries.

At the start of July, both petrol and diesel were showing a strong over-recovery, translating to large price reductions in August.

However, the latest data suggests that the diesel savings have effectively been erased, and that a price hike may be on the cards in the coming weeks.

Petrol is still showing an over-recovery, though the savings are considerably less than they were at the start of July.

These are the CEF’s fuel price adjustment predictions for the end of the third week of July:

• Petrol 93 – decrease of R1.07 per litre
• Petrol 95 – decrease of R1.03 per litre
• Diesel 0.05% (wholesale) – increase of R0.01 per litre
• Diesel 0.005% (wholesale) – decrease of R0.24 per litre

The swing in fuel prices is attributed to the global oil price, which has surged over the past week as the United States and Iran resumed hostilities, launching missile strikes across the Middle East.

This has caused the price of oil to jump from a low of $68 per barrel to over $85 per barrel as of the time of writing.

An analysis by Bloomberg found that the oil price situation has been exacerbated by problems in Europe.

Fuel markets in the US and Europe are flashing record tightness, raising the risk of higher costs for consumers already under strain, it said.

“The squeeze coincides with a plunge in Russian exports after Ukraine attacked the country’s refineries and prompted Moscow to ban diesel exports.”

In South Africa, this economic uncertainty has led to a pessimistic outlook, with fuel prices dipping further into the red.

The following table shows how fuel prices will be affected in August, based on the current projections: