Decreasing oil prices good news for SA fuel users
The Automobile Association of South Africa (AA) has predicted a 91 cents decrease for a litre of petrol, 70 cents drop for diesel and 62 cents for illuminating paraffin in July
IF oil prices settle at a lower level and stability returns to the rand, motorists will be in for some good news at the petrol pumps next month.
The Automobile Association of South Africa (AA) has predicted a 91 cents decrease for a litre of petrol, 70 cents drop for diesel and 62 cents for illuminating paraffin in July.
This is owing to a recent decrease in oil prices which have painted a rosier picture for South African fuel users than has been the case for much of 2019.
‘The story of the month is definitely oil. Crude laboured above $70 a barrel for large portions of April and May, as the tug of war continued between the Organisation of the Petroleum Exporting Countries (OPEC) which favour ongoing output restrictions, and the USA where production is steaming ahead.
‘There has been a remarkable drop in the price of oil since the end of May, with the commodity currently trading at around $61 dollars a barrel,’ the AA said based on unaudited mid-month fuel price data released by the Central Energy Fund.
The association said the rand weakened substantially against the US dollar, taking some of the shine off oil’s retreat.
‘The expected price drops are nonetheless substantial,’ the AA said.
Earlier this month the Department of Energy said the rand had depreciated against the US dollar from R14.14 to R14.41 leading to a higher contribution to the basic fuel price.
‘Brent crude oil price on the other hand experienced a slight increase from 71.00 US dollars (USD) per barrel to 71.60 USD per barrel.
‘The pressure on oil prices has been caused by the recent escalating tensions between the United States of America and China.
‘Going forward the expectation is that barring any negative geopolitical event, the indications are that there will be a reprieve in fuel prices for the month of July,’ said Minister of Energy, Gwede Mantashe.
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