Fuel price hikes looking likely for November as oil market volatility persists
Following five successive months of fuel price decreases, the scales are now tipping in favour of an increase in the coming month.
The latest data from the Central Energy Fund (CEF) shows an under-recovery has developed for both petrol and diesel prices, which should translate into price increases if oil markets don’t subside between now and the end of October.
Due to the volatility of oil prices seen during the review period so far, the mid-month figures don’t lend themselves to an accurate prediction of November’s fuel prices.
Yet as it stands, 95 Unleaded petrol and 500ppm diesel are both in the red to the tune of 14 cents. But these figures are growing by the day and could easily swell into a more substantial increase by month-end, albeit likely not more than 70 cents per litre.
There is however a glimmer of hope that the decreases will be minimal, with global oil prices having eased on Tuesday and Wednesday after reports surfaced that Israel was not planning to strike Iran’s crude or nuclear facilities in retaliation for a missile attack earlier this month, AFP reported. Uncertainty over China’s economic outlook is also weighing on prices at present.
These factors saw the price of Brent Crude oil easing to around $75 per barrel (R1,320) after hitting the $80 mark earlier this week for the first time since August. The prospect of a wider Middle Eastern conflict has been keeping investors on edge for the past two weeks.
Notwithstanding, oil prices will need to subside further to counteract the current under-recovery, as oil averaged $72 during last month’s review period. The rand, which is currently hovering close to last month’s average of $17.67 to the US dollar, is likely to have a muted effect on next month’s fuel prices.
At the beginning of October, the price of petrol dropped by between R1.06 (93 Unleaded) and R1.14 (95 Unleaded), making it around R1.50 less expensive than it was in January 2024, while diesel dropped by R1.12 (50ppm) to R1.14 (500ppm).
95 ULP petrol currently costs R20.26 at the coast and R21.05 in the inland regions, where 93 ULP retails for R20.73.
IOL