You may remember a report from earlier this month suggesting that substantial fuel price cuts were on the cards for South Africa at the start of September. But now, according to the Automobile Association, that’s no longer the case.
Indeed, thanks to renewed oil price strength and a turnaround in the rand/dollar exchange rate, the brakes have been firmly applied to the substantial drops in fuel prices suggested by mid-August data.
“International petroleum prices have put in a surprising rally since the middle of the month,” the AA said, commenting on unaudited end-August fuel price data released by the Central Energy Fund.
The AA noted that a stronger rand would have cushioned this increase in international petroleum prices, but that this was not the case thanks to the “latest developments related to the weakening rand”.
In mid-August, when the rand was at stronger levels, the AA predicted that petrol would drop by up to 69 cents a litre, diesel by 94 cents a litre, and illuminating paraffin by around 92 cents a litre. The Association now says it expects petrol to fall by only around 25 cents a litre, diesel by 54 cents, and illuminating paraffin also by 54 cents.
“The stronger oil price might have been kept in check more effectively had the rand not sagged so sharply against the dollar in the wake of developments around the minister of finance, Pravin Gordhan, being the subject of further investigation by the Hawks,” the AA said.
The AA further noted that while the impact of the significant devaluation of the rand against the dollar would not be felt immediately, the effects of the weaker rand on fuel prices would be noticeable towards the middle and end of September, if it did not strengthen before then.
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