Stronger rand ‘cannot offset’ global oil price surge
South Africa’s fuel prices will rise sharply in September, with petrol up R1.34 per litre and diesel increasing by up to R3.15 amid global supply pressures.
KPMG South Africa economist says a stronger rand cannot offset the global fuel price surge in September.
Economist Frank Blackmore says the under-recovery for 95-octane petrol is R1,06, and for 93-octane it is 96 cents.
Diesel under-recoveries are also high at R2.71 cents and R2.92 cents.
Blackmore says while the rand strengthened from R16.90 to just R16.00 against the dollar, global fuel prices rose sharply, caused by the Russia-Ukraine war:
“The big issue in fuel prices is the story around reduced refining capacity, specifically from Russia at this point, meaning that prices for refined products have gone up a lot more than the price for oil. And therefore, we feel these fluctuations month to month in our inflation.”
Both grades of petrol will increase by R1.34 a litre at midnight on Tuesday, while diesel is set to jump by between R2.93 and R3.15 per litre.
“Illuminating paraffin for wholesale will increase by two hundred and thirteen cents per litre," the Department of Mineral and Petroleum Resources announced on Monday.
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Spokesperson for the department, Lerato Ntsoko, said the increases come amid US-Iran tensions, uncertainty over oil shipments through the Strait of Hormuz and supply shortages linked to the Russia-Ukraine conflict.
"International factors include the fact that South Africa imports both crude oil and finished products at a price set at the international level, including importation costs."
A higher slate levy has also added to the increases, despite the slight strengthening of the rand against the US dollar.
