Ongoing declines in the price of oil since the second week of the year will give South African motorists a breather in February, says the Automobile Association (AA).
Citing unaudited month-end fuel price data released by the Central Energy Fund, the group predicts that a rebound in the oil price will see slight decreases across the board.
The AA said it expects 95 Octane petrol will drop by around 13 cents a litre, with the other reductions marginal: 93 Octane petrol and both grades of diesel by four cents, and illuminating paraffin by three cents.
“Rising tensions between the USA and Iran in the opening days of 2020 sparked a sharp increase in international oil prices, but the commodity has rebounded quickly.
“In fact, the oil price has returned to a level we might have expected had the US-Iran flare-up not taken place at all,” the AA said.
Oil has dipped to its lowest level since the start of December. However, the rand/US dollar exchange rate is steadily moving in the opposite direction, with the rand having softened from its January 1 level of around R14.05 to the dollar to its current average of R14.30.
“We have some concerns over this ongoing weakening in the absence of any overt Rand shocks,” the AA said. “It is not a good sign of confidence in the South African economy.”
“We’re pleased fuel prices have managed to tread water at the start of a year, a year which is likely to again be extremely economically challenging,” the AA said.