The AA has predicted a big drop in the local price of petrol for the month ahead.
“Rand weakness against the US dollar has paled into insignificance against the fuel price bonanza caused by the massive retreat of international petroleum prices, setting the stage for large reductions in fuel prices at month-end,” said the AA.
This comment is based on unaudited mid-month fuel price data released by the Central Energy Fund.
The AA said the current data shows:
- Petrol price decrease – R1.11 per litre (excluding 25 cent levy increase)
- Diesel price decrease – R1.10 per litre (excluding 25 cent levy increase)
- Illuminating paraffin price decrease – R1.18 per litre
“However, these declines must be weighed against the 25 cent increases to the fuel levies announced by the Finance Minister in February, which come into effect in April,” said the AA.
“The outlook based on the current data with the levy adjustments taken into account is for a decrease of up to 86 cents a litre for petrol, and up to 85 cents a litre for diesel. The levies are not applied to paraffin.”
The AA added that as the COVID-19 coronavirus spreads globally, markets have suffered and the rand has dropped sharply against the dollar.
“However, this has happened side-by-side with Saudi Arabia’s decision to break ranks with OPEC. Not only has Saudi Arabia slashed its crude prices, it has also increased production substantially.”
The AA said Saudi Arabia’s actions come “at a time where global oil demand is in decline as the COVID-19 virus hits manufacturing and commerce, leading to a steep slump in the oil price”.
It added that it doesn’t believe the declines will end at their current levels.
“There is little indication of what the final picture of COVID-19 spread will be, nor where the rand will stabilise against the dollar.”