Fuel prices are set for hefty rises at the end of the month if current trends continue. That’s according to the Automobile Association (AA), commenting on unaudited mid-month fuel price data released by the Central Energy Fund.
"It's been a good month for the rand so far, with the local currency picking up around 15 cents against the US dollar, but the basic fuel price has shot up since the start of December, raising the spectre of quite substantial fuel price rises if there isn't a pullback before month end," the AA says.
"Diesel and illuminating paraffin are the worst hit, with the current data showing an increase of 52 cents a litre for these fuel types. But petrol hasn't escaped unscathed, with increases of up to 34 cents a litre on the cards."
These increases come despite significant global refining overcapacity and a slight increase in the worldwide oil supply alongside falling demand.
The AA noted the International Energy Agency's (IEA) recent comments that optimism around an effective vaccine for Covid-19 could accelerate the economic recovery from the pandemic.
"Although the IEA does not expect a significant impact before the second half of 2021, we would not be surprised if optimism over the vaccine has been behind recent oil strength. Further strength may be on the cards if the vaccination plan shows large-scale effectiveness," the association added.
