Mixed bag predicted for fuel

DIESEL users are set for a price reduction next month, but the petrol price is likely to increase.

The Automobile Association (AA) says a seven cents per litre increase for petrol is expected, but a 20 cent decrease for diesel, while illuminating paraffin will likely decrease by 14 cents.

‘While the rand has won ground against the US dollar in July, international oil prices have increased, offsetting the rand’s gains.

‘The rand has progressively appreciated against the US dollar since 1 July, dipping below the R14 to the dollar mark.

‘However, international oil prices which pulled back further in the first week of July, have raced upwards again on the back of concerns over international inventories and ongoing political instability in the Middle East,’ said the AA.

The association said the mid-month fuel picture is usually a good indicator of what is likely to happen at month’s end.

‘The current political and economic drivers of both the exchange rate and oil price are highly fluid.

‘We regard the current figures as merely indicative at this stage, and pragmatism suggests the picture at month end might be substantially different from the current outlook,’ the AA said.

Minister of Energy Gwede Mantashe last week said the volatility of crude oil prices continues to have an impact on fuel prices, and this in turn contributes to wild swings in inflation.

‘South Africa remains an importer of both crude oil as well as petroleum products, and these commodities are US dollar denominated.