South Africans should brace themselves for record fuel price increases in April given the ongoing market volatility emanating from the Ukraine-Russian conflict.
According to the Automobile Association (AA), data from the Central Energy Fund indicates that fuel prices will reach R24/l for petrol and R23.60 for diesel.
95 octane petrol is set to increase by R2.15/l, 93 octane is expected to climb by R2.07/l, diesel by between R2.94/l and R3.08/l and illuminating paraffin by R2.51/l.
The Ukraine-Russian war has sparked significant volatility in the market and has further triggered supply worries, as Russia is the world’s third top producer of crude oil.
The effects have been evident in the movement of international prices that have soared to record levels in recent weeks.
“Based on the current data, the increase to oil prices is contributing 98pc to the predicted price hikes, with the rand – which stabilised around R15.11 to the US dollar, contributing the other 2pc. Effectively, though, the rand’s value against the US dollar is having a nominal impact on the price of fuel locally,” the AA said in a statement.
AA’s spokesperson, Layton Beard told Moneyweb that the Department of Mineral Resources and Energy (DMRE) will make an adjustment to the prices two or three days before the end of the month which will grant consumers some relief.
However, he adds that the conflict is having a ripple effect across the globe and consumers will have to stomach the high costs ultimately.
“If realised at month end, these will be the biggest increases to fuel prices in South Africa’s history and will, undoubtedly, have major ramifications for all consumers and the economy in general,” the AA noted.
“We must note, though, that this is the mid-month outlook, and oil prices are for the moment see-sawing significantly. So, there may yet be some relief before the official adjustment by the DMRE is made going into April.”
It says it’s witnessing record fuel prices around the world as the high oil prices exact their toll in every market.
“Locally there is little to cushion the blow for millions of South Africans who are struggling to cope with a fragile economy which is hurting their personal financial situation. Consumers should brace themselves and prepare for what is likely to be a long winter if the conflict in Ukraine is drawn out.”— Bloomberg.