Fuel price increases at the end of May are set to be driven by both the weak rand and stronger international oil prices, the Automobile Association cautioned on Friday.
It was commenting on unaudited mid-month fuel price data released by the Central Energy Fund (CEF).
“Motorists have been fortunate in 2016 so far, with lower oil prices buffering the country from the weaker rand,” the AA said.
“However, oil has now strengthened while the rand continues to decline, with both contributing to the current under-recovery picture.”
By 12.40pm, the rand was trading at R15,73/US$ and Brent crude at $49,20/barrel.
The mid-month data shows petrol set for an increase of around 39c/l, with stronger oil accounting for around 23c of the rise, and the weaker rand contributing 16c. Diesel is faring worse, with a 61c rise on the cards, while illuminating paraffin is showing a 44c/l increase.
“With oil prices rising steadily, South African fuel users have lost their cushion against the rand’s ongoing weakness,” the AA commented.
“Our concern over the rand’s short-term trajectory is growing; since the start of May, it has depreciated from around R14,20 to the US dollar to its current level of R15,80. If oil continues to firm, rand weakness is set to have a severe impact on fuel users,” the AA warned.