Motorists might be in for another shocking petrol hike in June if global oil prices, and the volatility of the fluctuating rand, stay on their current path.
The plunging production of crude oil in Venezuela, as well as sanctions disrupting oil exports in Iran, coupled with Saudi Arabia pushing for even higher oil prices – have all contributed to the increasing price of oil.
Entering May, however, these trends have not yet abated, with the current recovery sitting at close to 80 cents per litre.
Although motorists are still reeling from the 50 cent petrol price hike that came into effect at the start of May, it would have been doubled if the Department of Energy had made an adjustment just a day later. An error occurred during the closing off of the reporting period for fuel increases by the Department of Energy. Had the error not occurred, the price of fuel would have been pushed up to 92 cents per litre.
The Central Energy Fund states that the recovery of petrol was sitting at close to R1.00 at the tail end of April. This price point was driven by the ever-climbing global fuel price, as well as the the rand, which was much weaker in the past week.
In an analysis by Bloomberg, the volatility of the price of oil is spurred by the speculation that president of the United States of America, Donald Trump, will pull out of a 2015 deal with Iran and impose sanctions on the oil-rich country.
According to BusinessTech, the Automobile Association has said if the rand does not strengthen significantly against the US dollar, an increase in the price of petrol come June will be unavoidable.
The lower global price of gold, which one of South Africa’s key exports and a major source of foreign currency, has also contributed to the weakening of the rand. As of Tuesday, the rand stands at R12.51 against the US dollar.