Fuel Prices Set to Hike to Record High of R24 Per Litre Amid Russia’s Invasion on Ukraine
- The world market has suffered a major blow in oil and subsequent fuel prices as Russia continues its conquest of Ukraine
- The Automobile Association (AA) stated that should expected figures come into effect, this would be the biggest increase in South Africa’s history
- Economists have urged the local government to intervene as hikes will have a negative ripple effect on the agricultural sector, and, therefore, food prices
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The ongoing Russia-Ukraine conflict has led to significant instability in the world market, making it difficult to determine how much South Africa’s petrol price will increase at month-end.
Reports have warned that fuel prices are expected to rise to their highest yet in April. This is according to data from Central Energy Fund, which revealed that 95 octane petrol is set to increase by R2.15/ℓ, 93 octane is expected to climb by R2.07/ℓ, diesel by between R2.94/ℓ and R3.08/ℓ and illuminating paraffin by R2.51/ℓ.
Source: Getty Images
According to News24, the Automobile Association (AA) stated if these figures come into effect, at month-end, these will be the biggest increases to fuel prices in South Africa’s history and will, undoubtedly, have major ramifications for all consumers and the economy in general.
Economists say that it is time for the South African government to intervene as these hikes will have a ripple effect on the agricultural sector as well as food prices.
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“With global wheat prices and agricultural input costs skyrocketing, the government must take urgent action and suspend the fuel levies to provide relief for farmers, especially the nation’s small-scale farmers, and contain food prices.
“Failure to act can only worsen the pricing pressure on consumers, compromising food security, especially for the most vulnerable in society,” said Agri SA economist chief economist Kulani Siweya speaking to Sunday Times.
The impact of oil prices
Russia is the world’s third-largest producer of crude oil, and the expectation that it will be locked out of the market has caused a surge in oil prices. Traders are scrambling to secure oil supplies with Russia, unable to deliver some of its oils due to shipping and banking restrictions.
BusinessTech started that the Bureau for Economic Research (BER) said oil prices surged even higher towards $140/bbl after reports emerged that the US and European allies were discussing a ban on oil imports from Russia, early in the week.
“In the end, while the US announced an immediate ban, the UK said it would phase out Russian oil imports by the end of this year.”
However, it has since fallen back to below $100 amid negotiations between Russia and Ukraine, as well as new lockdowns in China, which will cool fuel demand. The rand has also remained stable.
Based on the current data, the increase in oil prices is contributing 98% to the predicted price hikes, with the rand contributing the other 2%, News24 said.
South Africa's fuel price is much higher than other African countries
Meanwhile, Briefly News previously reported that South Africans are still coming to terms with the fact the price of petrol has once again gone over the R20/ℓ mark since December 2021. Many citizens were outraged by the sharp increase in fuel but their anger subsided a little bit when the fuel price decreased in January 2022.
However, on Wednesday, 2 February, the Department of Energy and Mineral Resources announced another fuel hike which was just as drastic as the fuel hike many complained about in December.
The new fuel increase placed the price of 95 petrol at R20.14 from R19.61 and 93 petrol is now R19.89 from R19.36. 0.05% diesel went from R17.24 to R18.04 while 0.005% diesel went from R17.28 to R18.07.
Source: Briefly News
