South African motorists will be facing a steep increase in fuel prices on Wednesday, with both 93 and 95 unleaded petrol slated for an increase of R1.71 per litre. Meanwhile, diesel users will be grappling with an even more substantial hike, as the wholesale price of diesel will surge by R2.84 per litre.
The upcoming fuel price hike in South Africa is a result of a complex interplay of international factors, including oil prices, production disruptions and exchange rate fluctuations.
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According to the Automobile Association (AA), this impending surge marks an unprecedented price increase. The price of illuminating paraffin is not spared either, as it is set to rise by R2.78 per litre.
News24 reports that the escalation in fuel costs paints a challenging picture for consumers. A litre of 95 unleaded petrol will soon command a price tag of R24.54, marking the highest level observed since August 2022. Simultaneously, the wholesale price of diesel will reach R23.05 per litre, marking a new pinnacle for 2023. For context, it’s worth noting that in July of the previous year, diesel prices hit a record high of R25.40.
The fluctuations in South African fuel prices are primarily a reflection of international factors, notably global oil prices and the exchange rate of the South African rand against the US dollar. Since oil is priced in dollars, its value in rand terms is tied to the exchange rate.
The Department of Mineral Resources and Energy released a statement explaining the reasons behind these recent price hikes. They pointed out that the average price of Brent crude oil had surged from $79.75 per barrel to $84.78 over the past month. This spike was attributed to production cuts implemented by Saudi Arabia.
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Furthermore, the department highlighted that the soaring petrol prices can be attributed to low inventories and refinery disruptions. These issues have impeded the production of blending components used in the manufacturing of summer-grade petrol, driving up its production cost.
Diesel and paraffin prices have similarly been impacted by international dynamics. Reduced shipments of Russia’s Urals crude oil, known for its richness in middle distillate, and growing demand for middle distillates in anticipation of the winter season in the Northern Hemisphere have driven up the costs of these fuel types.
On the currency front, the average rand-dollar exchange rate has depreciated from R18.28 to R18.67 over the past month. This fluctuation in the exchange rate has contributed to the overall increase in fuel prices, as it directly affects the cost of importing oil.
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