Lower oil prices set up fuel price drop

A SUBSTANTIAL fuel price drop is on the cards this month owing to lower international oil prices throughout June.

The Automobile Association (AA) is expecting the price of petrol to decrease by 86 cents a litre, diesel by 68 cents and illuminating paraffin by 58 cents.

This is based on the un-audited month-end fuel price data released by the Central Energy Fund.

‘June was the weakest month for oil in the last quarter, with crude briefly slipping below $60 a barrel at mid-month.

‘However, renewed tensions in the Middle East and a downturn in US oil inventories have put pressure on the commodity, which has picked up over the past few days,’ the AA said.

The association said the damaging spat over the mandate of the Reserve Bank also sent jitters through investment markets.

‘The rand’s daily exchange rate against the US dollar spiked by more than 60 cents.

‘Although the currency recovered against the dollar towards month-end, the exchange rate average for the month is negative by about 11 cents, meaning fuel users missed out on an even bigger drop,’ the AA said.

Last month the price of 93 and 95 unleaded petrol increased by 9 cents a litre, diesel by 33.16 cents and illuminating paraffin went up by 8 cents per litre.

The Department of Energy said these increases were owing to, among other factors, the rand/dollar exchange rate and the Brent crude oil price.

‘The rand depreciated against the US dollar from R14.14 to R14.41.

‘The pressure on oil prices has been caused by the recent escalating tensions between the United States of America and China.’