The Automobile Association says South African motorists will enjoy a “surprise” fuel price cut in February 2020 on the back of an ongoing decline in the price of oil.
"Rising tensions between the US and Iran in the opening days of 2020 sparked a sharp increase in international oil prices, but the commodity has rebounded quickly,” the AA said in a statement commenting on unaudited month-end fuel price data released by the Central Energy Fund.
“In fact, the oil price has returned to a level we might have expected had the US-Iran flare-up not taken place at all," the organisation added.
Oil dipped to its lowest level since the start of December. However, the rand/dollar exchange rate was steadily moving in the opposite direction, with the rand having softened from its January 1 level of around R14,05 to the dollar to its current average of R14,30.
"We have some concerns over this ongoing weakening in the absence of any overt rand shocks. It is not a good sign of confidence in the SA economy," the AA said.
Despite the rand's trend, all fuel types are set for a decrease at month end, according to the AA. Indeed, 95 Octane petrol will drop by around 13 cents a litre, with the other reductions marginal: 93 Octane petrol and both grades of diesel by four cents, and illuminating paraffin by three cents.
"We're pleased fuel prices have managed to tread water at the start of a year, a year which is likely to again be extremely economically challenging," the AA concluded.