Fuel prices are set for a sharp jump at the beginning of June, with the potential of further rises in the medium term.
This is according to the Automobile Association (AA) which was commenting on unaudited month-end data supplied by the Central Energy Fund (CEF).
“International petroleum prices continued their upward march during May and the weakening Rand / US dollar exchange rate has exposed the consumer to the full force of oil’s strength,” the AA said.
“Petrol is set for a rise of 52 cents a litre in June, illuminating paraffin will be up 61 cents, and diesel a full 78 cents.”
The Association said it was concerned by the steady rise in oil prices in the current weak Rand environment, notwithstanding international opinion that global over-supply could see prices pull back.
According to the Department of Energy, crude oil benchmarks have rallied since late April due to issues regarding geopolitical concerns affecting the market. Reductions in output in Nigeria, Columbia and the US contributed to the surge in prices during the past month.
In response to questions from the AA the department noted that “an energy crises in Venezuela, where power outages due to a drought and subsequent reduction in power generation at the country’s main hydropower facility, was beginning to affect the wider economy including operations in the oil and gas sector.”
It noted that the recent wildfires in Canada reduced crude oil exports to the US, forcing the county to draw on inventories.
“With South Africa’s weak economy, our concern is that even if oil prices moderate, further declines in the Rand will mask the benefit. It is possible that fuel prices will test new highs in the coming months, placing yet more stress on consumers,” the AA concluded.