The Automobile Association has warned that “sharp increases” in the landed prices of fuels are set to hit South African motorists hard at the end of April.
“Petroleum prices were largely flat in the first week of April, but spiked sharply as tensions escalated in Syria,” the AA said, commenting on unaudited mid-month data released by the Central Energy Fund.
“The Middle East lies near many of the world’s key oil producers, and petroleum prices have historically been sensitive to instability in the region.”
The rand also weakened slightly against the dollar in the first half of April, but the AA pointed out that the spike in international petroleum prices would account for nearly the entire rise in fuel prices predicted by the mid-month data.
“On the current data, petrol is set for a rise of 41 cents a litre, diesel 48 cents, and illuminating paraffin 38 cents. In all of these increases, the movement in the exchange rate accounts for just four cents of the rise,” noted the AA.
The predicted increase in May is set to come on the back of a 72 cents increase in April meaning, if it materialised, that fuel prices would have increased by more than one rand a litre in the space of two months.
The AA furthermore warned that prolonged instability in the Middle East could drive international petroleum prices higher.
“Several foreign powers have now taken a position in the Syrian civil war. If tensions escalate, or the war itself drags out even further, the outlook for oil prices would become more negative.
“South Africans should be aware that their fuel budgets might come under renewed strain in the short- to medium-term,” the AA said.