Bloodshed awaits in the Eastern bloc of Europe and while sitting on the other side of the planet seemingly disconnected from imminent hostilities, it will still have a cascading effect as we can expect rising fuel prices.
Yes, that’s right, the fuel price is anticipated to again rise after the declaration of war Russia issued to Ukraine begins to materialise into on-the-ground conflict. Such is the nature of a globalised world where diverse people and far away countries remain inter-connected through essential trade.
The destructive nature of a 200,000 strong Russian assault into sovereign Ukraine will not only greatly disrupt life for civilians and stock but will destabilise European supply chains which will in turn drive global fuel prices to all time highs. The enormous land and resource mass that Russia holds not only gives it the title of largest country in the world but also the third-largest crude oil producer.
Crude oil is essential in the production of petrol and diesel so as tensions increase with sanctions from the West while supply chains become defunct we can expect rising fuel prices to climb to unprecedented levels.
Analysts predict that fuel prices could rise between 10 and 20 percent in the following months of conflict with the price severity depending on the scale of invasion and severity of battle. Brent crude futures jumped more than 3.5% to shoot past $100 a barrel on Thursday for the first time since September 2014.
This means that the price of fuel locally could rise between R2/litre and R5/litre bringing the potential price closer to R25/litre. Although this is broad speculation on our part for the time being while we wait for the official verdict from the Minister of Mineral Resources and Energy of South Africa: Gwede Mantashe. The numbers are looking grim as we can expect rising fuel prices.