Petrol looks set for another price cut, but diesel may be hiked

Almost mid-way through the month, the latest data from the Central Energy Fund show that petrol prices may be cut in the first week of October.

However, diesel is on track for a price hike.

The fuel prices are usually adjusted on the first Wednesday of a month and determined by the price of oil and the rand-dollar exchange rate.

While the rand has seen some volatility this month, the oil price has slumped to its lowest level since January amid concern about energy demand as steep interest rate hikes weigh on global economic growth.

On Wednesday, Brent crude oil was trading below $93 a barrel – after hitting a high of $123 a barrel following Russia’s invasion of Ukraine in February.

But diesel prices are remaining stickier than petrol because of a squeeze on diesel supplies worldwide.

This is due in part because Europe – which produces more petrol than it needs – is an importer of diesel, much of it from Russia.

The invasion of Ukraine and subsequent sanctions stopped the flows. This has squeezed prices higher as European countries scramble to find alternative diesel sources.

In South Africa, continuing problems with the railways have increased truck deliveries – fuelling the local demand for diesel.

According to 2019 data from the Department of Energy, South Africa consumed 12.9 billion litres of diesel and 10.77 billion litres of petrol.

With more than two months to go before the end of the month, the October fuel prices could still see big changes depending on oil price and exchange rate volatility. – fin24.com