Bullish international oil prices are setting the stage for yet another hefty hike in fuel prices. This is according to the Automobile Association (AA), which was commenting on unaudited mid-month fuel price data released by the Central Energy Fund.
The Association says the current picture shows month-end increases of up to 47 cents a litre for diesel, 56 cents a litre for petrol and 41 cents for illuminating paraffin.
“Oil prices advanced at a leisurely pace during January but the increase has quickened since then. International product prices shot up by around eight percent in the first two weeks of February,” the AA says.
On the plus side, the AA says the Rand/US dollar exchange rate has worked in South Africa’s favour, with the Rand strengthening around eight cents against the US dollar in February, although this has been far from enough to offset the oil price.
“If oil continues on this trajectory, South Africa’s fuel prices might edge back into record territory in the medium term. Fuel users also remain vulnerable to economic shocks which might weaken the Rand,” it concludes.