Zululand Observer - Weekender

Mixed bag predicted for fuel

- Gugu Myeni

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.

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