Mineral Resources and Energy Minister Gwede Mantashe.PHOTO: Picture: Raymond Morare
With the price of petrol expected to reach record highs this week, the Automobile Association (AA) has warned that further military action by Russia in Ukraine could push oil prices even higher, causing more local fuel price pain.
“The outlook for April remains unclear but… Russia’s military action in Ukraine could push international oil prices higher which will again impact locally,” the AA said in a statement.
“For now, it’s a question of wait and see how these prices move in the next few weeks.”
The department of mineral resources and energy announced on Saturday that rising crude oil prices amidst escalating fears created by the conflict in Ukraine, is one of the main reasons for a jump in SA fuel prices for March.
As from 2 March the price of petrol (both 93 and 95 ULP & LRP) will increase by R1.46/l, that of diesel (0.05% sulphur) by R1.44/l, diesel (0.005% sulphur) by R1.48/l, illuminating paraffin (wholesale) by R1.21/l, and the maximum LPGas retail price by 70 cents/kg.
The AA said that “for the first time in history” 95 octane petrol inland will rise above R21 a litre – at R21.60, while at the coast it will cost R20.88 a litre, the first time it has breached the R20 a litre level.
Oil rose above $100 a barrel last week as Russia invaded Ukraine, an action the European Union called one of the ‘darkest hours’ of the continent since World War 2. It has since dropped below the $100 mark, but Iraq – cartel Organization of Petroleum Exporting Countries’ (Opec’s) second largest member – announced that it stopped oil production from two southern fields with a combined capacity of almost half a million barrels a day. This is creating more fears of a tighter global oil supply and even higher prices.
The AA said that one silver lining was that any potential increases for April will not be combined with increases to fuel taxes as Finance Minister Enoch Godongwana announced in his maiden budget last week that the general fuel and Road Accident Fund levies will not increase this year.
“This is good news, but must be tempered by what happens in the next few weeks to the overall pricing of fuel.” the AA said.
Godongwana made an off-the-cuff remark in Wednesday’s budget speech that he was consulting with Mineral Resources and Energy Minister Gwede Mantashe on the future of the fuel price.
“The intention is review the structure of the petrol price going forward – to be competitive in this economy,” Godongwana said.