A substantial decrease in the price of all grades of fuel, spearheaded by worsening international oil prices attributed to the Coronavirus, has been predicted by the Automobile Association (AA) for April.
Commenting on unaudited data released by the Central Energy Fund on Friday (13 March), the AA said that current data points to a R1.11 decrease in the price of petrol, R1.18 in diesel and R1.10 in illuminating paraffin. The downturns don’t however take into account the 25 cents uptake in levies announced by Finance Minister Tito Mboweni in his Budget Speech last month.
“As the spread of the COVID-19 virus accelerates across the globe, world financial markets have plunged, with capital fleeing to safe-haven assets. The Rand has been sharply weaker against the dollar on this trend. However, this has happened side-by-side with Saudi Arabia’s decision to break ranks with OPEC. Not only has Saudi Arabia slashed its crude prices, it has also increased production substantially,” the AA said in a statement.
Describing the sudden price drop as not having been seen since the first Gulf War broke out in 1990, the association further remarked that, “there is little indication of what the final picture of COVID-19 spread will be, nor where the Rand will stabilise against the dollar.
“It can also not be predicted how long the Saudis are prepared to hold out in their oil price war, since their oil industry is believed to be able to maintain profitability at substantially lower per-barrel prices than the current level. It will take quite some time for the global economy to get back on an even keel after the current ongoing events, and the next two or three months seem set to provide some fuel price relief to hard-pressed motorists”.