- The price of 95 unleaded petrol could drop by around 2.60 rand per liter in the first week of September.
- This was thanks to a sharp drop in oil prices, while the rand gained ground.
- Oil prices are under pressure amid concerns about the Chinese economy and reports that the Iran nuclear deal could be renegotiated, adding 2.5 million barrels a day to the market.
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After a bleak few months, South African motorists are likely to get some major relief next month – unless the price of oil and the rand-to-dollar exchange rate weaken from current levels.
According to the latest data from the Central Energy Fund, the price of 95 unleaded petrol is expected to drop by about 2.60 rand per liter in the first week of September. The price of 93 petrol could drop by about 2.45 rand per litre. Diesel can be discounted by more than 2.30 rand
The price of illuminating paraffin will drop by almost 2 rand per liter.
“The expected reduction is good news for consumers who have suffered from these prices for the past six months. With this expected reduction, the price of 95ULP will drop below 23 rand per litre, while the price of 93ULP will cost just over 22 rand. 50/l. Although fuel is more expensive now than it was at the start of the year, these forecast reductions do provide some relief,” says the Automobile Association.
The AA says that while the figures are encouraging, it should be remembered that these are only mid-month figures and that the picture could change at the end of the month before adjustments are made for September.
Fuel prices are usually adjusted on the first Wednesday of the month and are based on the price of oil and the rand-dollar exchange rate.
After hitting a high of $123 in March following Russia’s invasion of Ukraine, oil prices have fallen. On Monday, the price of Brent crude fell almost 5% to $93.46 a barrel – about the lowest level in six months.
AFP reported that the weakness was due to new data that showed a slowdown in China’s economic recovery.
China’s central bank unexpectedly cut key interest rates on Monday as a slew of data showed weakness in the world’s second-largest economy.
Beijing’s steadfast adherence to a zero-spread strategy for COVID-19 has held back the economic recovery as snap lockdowns and prolonged quarantines undermine business activity and the recovery in consumption.
Meanwhile, Iran’s foreign minister said Tehran would present its “final” proposal later on Monday for talks on renewing the 2015 nuclear deal with world powers after Washington accepted key demands.
The deal will mean Iran’s crude output of 2.5 million barrels a day will no longer be subject to international sanctions and help lift supply curbs that have been pushing up prices.
The rand was last seen at 16.41 rand after falling to 17 rand to the dollar last month. The dollar retreated after the US economy contracted and inflation data came in cooler than expected. This has fueled speculation that the Federal Reserve will not raise rates as high as previously expected. Higher US rates are negative for the rand, which then earns comparatively lower interest.