The price of 95 octane petrol will increase by 37 cents per litre (cpl) tomorrow while the price of diesel (0.005% sulphur) will increase by as much as 71cpl due to stronger global oil prices last month, offset slightly by a stronger rand.
South Africa’s fuel prices are adjusted monthly, informed by international and local factors including international crude oil and finished product prices, and including importation costs such as shipping costs.
The Department of Mineral Resources and Energy said yesterday that the reason why fuel prices had to rise is because the average Brent Crude oil price increased to $79.75 (R1425) a barrel in the period under review, from $75.10 per barrel the previous month.
The main reasons why the Brent crude oil price rose was due to the increased demand for crude oil from China and India, and tightening supply due to continued production cuts by Saudi Arabia, the department said.
“Most analysts expect the supply constraints to push the price higher in the next few weeks.” the department added, which if it materialises, may mean that petrol prices will rise again in September.
An online search by Business Report showed that Brent crude futures rose 74 cents to as much as $85.73 a barrel yesterday afternoon, its highest price in six months, on expectations that Saudi Arabia will extend output cuts into September and tighten global supply.
Meanwhile, average international product prices of petrol, diesel and Illuminating paraffin has followed the rising trend of crude oil prices.
These increases led to higher contributions to the Basic Fuel Prices of petrol, diesel and illuminating paraffin by 63.59c/l, 99.09c/l and 98.71c/l, respectively.
The rand appreciated on average, against the dollar to R18.26 per dollar from 18.68 per dollar during the period, which led to lower contributions to the Basic Fuel Prices of petrol, diesel and illuminating paraffin by 27.64c/l, 27.36c/l and 27.10c/l, respectively.
The prices of both 93 and 95 octane petrol will increase by 37cpl tomorrow, diesel (0.05% sulphur) will increase by 72cpl, while the price of illuminating paraffin (wholesale)will increase by 71cpl.
Rising fuel prices often pose a risk to the inflation outlook, an outlook that has also this month been dented by fears of the impact of the El Niño weather phenomena, as well as the effect of Russia’s failure to allow further grain exports from Ukraine, on the prices of agricultural produce and food.
BUSINESS REPORT