Massive petrol price drop in the pipeline
With Rand resilience and a declining oil price a further fuel price drop is expected to hit the pumps at the end of June.
The current picture suggests that road users could be looking at a petrol price decline of between 60 and 64 cents a litre at month end, with diesel showing a 60 cents reduction and illuminating paraffin 57 cents. This is according to the Automobile Association (AA), commenting on unaudited mid-month data released by the Central Energy Fund (CEF).”The Rand remained mostly stable against the US dollar in the first half of June, with strength in the currency contributing three cents a litre to the drop,” the AA says.
The Association says the fuel price will come under pressure if the three major ratings agencies downgrade Rand-denominated debt to junk status in future reviews of South Africa’s sovereign credit ratings. “The big move was from oil, which shrugged off OPEC’s production quotas to drop by around eight percent since the start of the month.”
The price drop is subject to international petrol prices as well as Rand strength. “Barring unexpected political or economic shocks in the lead-up to the next ratings reviews, we expect fuel price movements to mainly depend on international petroleum prices,” the Association concludes.