As oil hits 2-year high, here’s the outlook for SA’s petrol, diesel prices next month | Fin24

Fuel prices are adjusted by the Department of Mineral Resources and Energy on the first Wednesday of every month. (Pixabay)

South Africans could be due another small petrol price cut in the first week of July – but that could be wiped out if the oil price continues its current run.

With more than two weeks still to go before the July fuel prices are fixed, the Automobile Association (AA) released its mid-month fuel price forecast on Tuesday, based on information from the Central Energy Fund.

Petrol and diesel prices are largely determined by the oil price, as well as rand strength – given that SA must buy oil in dollar.

Fuel prices are adjusted by the Department of Mineral Resources and Energy on the first Wednesday of every month.

Earlier on Tuesday, the Brent Crude oil price reached $73.64 (around R1 014) a barrel, the highest level since April 2019. Oil prices have been climbing amid expectations that global demand may return to pre-pandemic levels more quickly than previously anticipated.

“So far, we’ve seen some quite sharp increases in the landed prices of fuel this month, especially for diesel. This has come somewhat unexpectedly after the long decline in the basic fuel price throughout May,” says the AA.

The AA is forecasting a six-cents-a-litre decrease for petrol. The picture for diesel is less rosy and is showing an increase of around 20 cents a litre, with a 14-cents-a-litre increase for illuminating paraffin when prices are adjusted for July.

“However, these forecasts could all change by month-end, as the rand looks to be flattening out while international oil prices are on an upward climb. Much as we hope for the current picture to continue, South Africa might well be looking at across-the-board fuel price increases for July,” it concludes.

The rand started the month at around R13.70/$ – strengthening to closer to R13.40 earlier in June. But it was last trading around R13.78 on Tuesday afternoon.

In the first week of June, both unleaded 95 petrol (R17.13 per litre), and unleaded 93 (R16.91) were cut by ten cents per litre.

Diesel (0.05% sulphur) was be hiked by 20 cents per litre and diesel (0.005% sulphur) increased by 21 cents per litre.