South African fuel users are set to be hit with yet more steep price hikes going into March. This is according to the Automobile Association (AA) which was commenting on unaudited month-end fuel price data released by the Central Energy Fund.
The Association says although the Rand performed well against the US dollar during February, gaining around 14 cents, it was far below what was needed to offset the climb in oil. As a result, fuel users can expect to see petrol up by around 66 cents a litre, diesel up by 57 cents, and illuminating paraffin up by 49 cents.
“The international oil price seems unstoppable. We are in an eight-week streak of price climbs with no sign yet of a ceiling,” notes the AA.
The Association says that increased economic activity made possible by the global rollout of the COVID-19 vaccine was leading to firming demand and higher prices. It also cites the impact of Saudi Arabia’s surprise cut, effective from February, of one million barrels of oil per day from its production targets above and beyond its OPEC commitments.
“On top of this, the USA’s domestic oil production tailed off in the wake of the petroleum glut at the height of the COVID-19 first wave in 2020, but information from the US Energy Information Administration (EIA) is showing that US inventories have dropped back into a normal range,” the AA says.
It adds that if US production doesn’t catch up with the falling inventory, the oil price will come under further pressure, noting that the per-barrel prices of crude had almost recovered to their pre-COVID-19 levels.
“Until oil supply and demand settle into stability, more hikes are likely. And, we cannot forget that April will already start with a significant addition of 26 cents a litre to fuel prices because of increases to the General Fuel and Road Accident Fund levies – inflicting further blows to already battered South African consumers,” the Association concludes.