Significant fuel price increase in June, warns AA
The Automobile Association (AA) has predicted a substantial fuel price increase in June as some 8 million South Africans return to work under level 3 of the lockdown.
The association's Layton Beard says the rise in the price of brent crude oil is the major reason for the sharp increase.
"The global lockdowns under Covid-19 saw fuel demand plummet. The resulting oversupply left storage bunkers full, with the extraordinary outcome that oil prices in the USA briefly dipped below zero.”
But the price is now rising as many countries around the world move to ease the lockdowns and restart their economies.
Beard says the petrol is expected to increase by up to R1.18 a litre, while diesel will be 22 to 25 cents a litre more expensive.
The price of illuminating paraffin is set to rise by 44 cent a litre.
He says the fuel demand has dropped significantly due to the Covid-19 pandemic, but is now expected to increase as economic activity increases globally.
"South Africans should remember that the fuel price is currently around four rand per litre lower than it was before the Covid-19 crisis hit. Fortunately, the rand has strengthened during May, which has helped insulate the country from some of the rises.”
The association advised motorists to anticipate fuel prices slowly returning to their previous levels over the medium to long term.