The Petrol and Diesel Prices For August 2023

The price of 95 octane petrol is set to increase by 37 cents per litre (cpl) starting tomorrow, while the price of diesel (0.005% sulphur) will see a significant increase of 71 cpl. These price hikes are attributed to the stronger global oil prices observed in the previous month, albeit partially offset by a stronger rand.

In South Africa, fuel prices are subject to monthly adjustments, influenced by a variety of international and local factors, including crude oil and finished product prices on the global market, as well as importation costs such as shipping expenses.

The Department of Mineral Resources and Energy explained that the surge in fuel prices is a result of the average Brent Crude oil price rising to $79.75 (R1425) per barrel in the review period, compared to $75.10 per barrel in the previous month. This increase in the Brent crude oil price can be attributed to the heightened demand for crude oil from China and India, coupled with the continued production cuts by Saudi Arabia, leading to tightened supply.

The Department further reported that analysts anticipate supply constraints to continue pushing prices higher in the upcoming weeks, which could result in further petrol price increases in September.

Online searches by Business Report reveal that Brent crude futures recently reached $85.73 a barrel, its highest price in six months. This surge was driven by expectations of Saudi Arabia extending output cuts into September, consequently tightening the global supply.

Additionally, the average international prices of petrol, diesel, and Illuminating paraffin have followed the rising trend of crude oil prices. This, in turn, contributed to higher Basic Fuel Prices of petrol, diesel, and illuminating paraffin by 63.59 c/l, 99.09 c/l, and 98.71 c/l, respectively.

However, there was a silver lining as the rand appreciated against the dollar, averaging at R18.26 per dollar during the period compared to 18.68 per dollar in the previous month. This appreciation led to lower contributions to the Basic Fuel Prices of petrol, diesel, and illuminating paraffin by 27.64 c/l, 27.36 c/l, and 27.10 c/l, respectively.

In summary, the impending fuel price increase is a result of the surge in global oil prices, primarily driven by the increased demand from China and India and the ongoing production cuts by Saudi Arabia. As fuel prices continue to rise, there are concerns about potential impacts on inflation, which have already been compounded this month by the El Niño weather phenomena and Russia’s restrictions on grain exports from Ukraine, affecting agricultural produce and food prices.

Source: IOL