International oil prices have been on a roller coaster this month thanks largely to escalating tensions in the Middle East, and this is not good news for fuel prices in South Africa.
On Monday the price of Brent Crude surpassed the $80 per barrel mark (R1,408) for the first time since August, Reuters reported, as investors became increasingly spooked by the possibility of a region-wide war in the Middle East.
This as strikes were exchanged between Israel and its foes in Lebanon and Gaza on the anniversary of the October 7, 2023 abductions in Israel.
Oil prices have since subsided to around the $76, as rising inventories in the US counteracted the Middle East risks as well as Hurricane Milton in the US, but this may not be enough to ward off a fuel price increase next month.
The latest data from the Central Energy Fund (CEF) implies that a fuel price increase remains a real risk for November if current trends persist.
Although it’s too early to accurately predict next month’s fuel price movements, the small over-recovery reflecting on the CEF chart for October 10, is likely to fall away in the coming days if oil prices don’t retreat further. A worrying sign is that the latest daily prices for 95 Unleaded are in the red to the tune of 75 cents.
South African fuel prices decreased for the fifth month in a row at the beginning of October, bringing petrol and diesel prices to their lowest levels since February 2022.
This latest fuel price cut, of up to R1.14 for 95 Unleaded petrol and 500ppm diesel, came as a result of oil prices retreating to an average of $72 per barrel and the rand to R17.68 against the US dollar during the previous review period.
With oil hovering at $76.58 on October 10, and the rand at R17.60, the odds are currently stacked in favour of a moderate fuel price increase in November.
IOL