Johannesburg - South African motorists and commuters are already buckling under the pressure of record fuel prices, but further hikes are looking likely for the coming months unless the current international oil price surge loses steam.
The price of Brent crude oil jumped $80 on Tuesday for the first time in almost three years. This comes on the back of expectations for surging demand and concerns about supplies as the world slowly emerges from the pandemic crisis.
At this stage it’s not clear how South Africa’s October fuel prices will be affected as the Department of Energy’s most recent fuel-price update was released around mid-month. Although this data had pointed towards a small petrol price decrease, the recent surge in international oil prices is likely to have tipped the scales.
The local currency is not helping the situation, with the rand having weakened from around R14.15 at mid-month, to R15.05 at the time of writing, on 28 September.
The department is set to release its month-end data at the end of this week.
Why are international oil prices rising?
With the global rollout of vaccines and easing of lockdowns this year, bets on demand for the black gold have surged, while an energy crunch in the northern hemisphere has sent natural gas prices to a seven-year high leading to a spillover into the oil market.
At the same time crude stockpiles have shrunk, while increases in output by OPEC and other major producers including Russia have been unable to temper the rally in the commodity.
Brent climbed 0.9 percent in morning Asian trade on Tuesday to $80.24, its highest level since October 2018.
"It looks like the oil rally has still got some legs," said John Driscoll of JTD Energy Services, adding: "I just don't see any evidence yet that the rally has topped out."
The advance comes even as the global economic recovery shows signs of slowing owing to supply chain issues and concerns about the Delta Covid variant that is leading to a spike in infections in several countries.
Prices have rocketed from the dark days of early last year, when lockdowns around the world hammered demand and saw the price of Brent sink to as low as $16.
In South Africa, 95 Unleaded petrol currently costs R17.62 at the coast and R18.34 in the inland regions, where the slightly cheaper 93 Unleaded petrol retails for R18.15.
IOL & AFP