Big petrol price increase in South Africa next week
Petrol and diesel prices are set to rise significantly next week as the oil price has risen over the past month, with the rand marginally weakening.
The local currency and oil prices have been volatile over the past few months as financial markets struggle to digest the impact of a second Trump presidency.
Fear of tariffs, a renewed global trade war, and heightened geopolitical tensions have increased uncertainty in global markets.
This tends to result in investors flocking to the dollar for safety, prompting a weakening in emerging market currencies such as the rand and elevated commodity prices due to potential supply chain disruptions.
The Central Energy Fund tracks the global oil price and exchange rate fluctuations to forecast the expected changes to the fuel price in South Africa.
Its data indicates the below changes for next week when fuel prices are adjusted on Wednesday –
- Petrol 93 – increase of 90 cents per litre.
- Petrol 95 – increase of 84 cents per litre.
- Diesel 0.05% – increase of 108 cents per litre.
- Diesel 0.005% – increase of 104 cents per litre.
Apart from the impact of Donald Trump kicking off his second term as US president, the oil price has risen by 4% on the back of data indicating sanctions on Russia are finally having an impact.
Oil exports from the country, a significant oil producer, have plummeted this month compared to the same period last year. Exports have hovered around a 16-month low.
While lower supply from a single country can usually be balanced by extra output from other states, the Organisation for Petroleum Exporting Countries (OPEC) has maintained the production cuts imposed on its members.
OPEC has delayed its plans to increase the oil output from its members and will not fully unwind production cuts until at least the end of 2026.
The oil price has also been pushed higher by Trump’s stated plans to impose tariffs on Canada, a major supplier to the US. More than half of US crude imports come from its northern neighbour.
Bloomberg reported the American Petroleum Institute said stockpiles of oil in the US have also risen on the back of fears of potential supply disruptions for the first time in ten weeks.
On the other hand, the rand has remained relatively flat in January despite whipsawing over the past week due to the fallout of the singing of the Expropriation Bill.
The rand lost as much as 1.5% of its value versus the dollar on Monday as the market digested the signing of the bill and the Democratic Alliance’s (DA) declaration of a dispute within the Government of National Unity (GNU).
The dispute resulted in many investors fearing that the coalition might come under pressure and potentially splinter after clashes over the implementation of National Health Insurance and the BELA Bill.
However, the DA made a public statement to say that it remained committed to the GNU and would work with the ANC to resolve the dispute over the Expropriation Bill.
The rand bounced back after the statement from DA leader John Steenhuisen, reversing earlier losses.
Apart from these recent swings, the rand has come under pressure in the months after Trump won the US election in November.
Trump’s policies are largely seen as boosting the dollar while weakening emerging market currencies such as the rand. The added uncertainty only exacerbates this, as investors flock to the dollar for relative safety.
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