May fuel cost may increase

SOUTH African motorists are likely to face another petrol price hike in May but diesel prices could come down slightly.

Mid-month data released by the Central Energy Fund currently points to increases of around 30 cents for both grades of petrol, while diesel could come down by between 25 cents and 30 cents.

The usual disclaimer applies here of course, because much can still change dramatically between now and the end of April.

Given the current tensions in the Middle East, the sums are also highly unlikely to add up in a more positive way.

The current over-recovery on diesel has weakened in recent days, which could erode May’s price relief, and the opposite is true on the petrol front, meaning a bigger increase is very possible at this stage.

Although the expected petrol price hike is relatively minor, it does come on the back of a 60 to 67 cent increase in April and a crippling R1.21 hike in March.

Should the cost of petrol increase by 30 cents, a litre of 95 Unleaded will inflate to R24.63 at the coast and R25.42 in Gauteng, where the cheaper 93 Unleaded will rise to R25.08.

Tensions in the Middle East have pushed the international price of Brent Crude oil past the $90 mark this month.

According to AFP, oil prices are climbing on fears of a wider war in the Middle East after Israel promised a response to Iran’s drone attack on the country on Saturday.

The prospect of a response by Israel means that this uncertainty and tension will “linger for quite some time” says ING Think analyst Warren Patterson.

This conflict, along with a stronger US dollar and economic uncertainty ahead of SA’s election next month has also sent the rand into a tailspin, breaching the $19 mark yesterday.

The local currency needs to trade below last month’s average of R18.86 in order to avoid a negative impact on the fuel price equation.