DATA FROM the Central Energy Fund suggests the petrol price may increase by 56 cents a litre at the end of this month.
 African News Agency (ANA)
JOHANNESBURG – Consumers are set for further pain at the pumps after the price of Brent crude oil hit a six-month high yesterday approaching $75 (R1 059) a barrel, after the White House confirmed that it would not extend waivers for countries that had previously been allowed to purchase Iranian crude.

The decision by the US government opened the door for Washington to impose economic penalties against companies or financial institutions that purchase Iranian oil when the current waivers expire next week.

Andre Botha, a senior dealer at TreasuryONE, said risky assets were on the back foot as Brent reached its highest level in 2019, as the US scrapped waivers to buy Iranian oil.

“Iran has vowed to close the Strait of Hormuz in retaliation, which will impact oil supply to global markets. This has caused a definite ripple effect for global risk and could see the rand tread a little water,” Botha said.

The rand, which was bid at R14.06 ahead of the long weekend, weakened to R14.30 against the dollar yesterday as the markets digested Eskom’s latest financial woes and geopolitical developments.

Bianca Botes, a corporate treasury manager at Peregrine Treasury Solutions, said: “The rand’s decline can be largely attributed to the bail-out of embattled state-owned enterprise Eskom, as well as (Donald) Trump entering into a trade conflict in the EU, promising retaliation with regards to tariffs.”

The weakening rand and an increase in the international oil price bode ill for South Africa’s inflation outlook, with consumers set to pay more at the tills in the months ahead.

The surge in fuel prices also negatively affects the inflation rate, which inched up to 4.5 percent in March on the back of a surge in fuel prices in that month.

Data from Bloomberg yesterday showed that the oil price has surged 40percent in 2019.

Analysts from Merchant West in a note said a surge in the oil price did not bode well for consumers. “This is very bad for the South African consumer, with fuel taxes being shunted higher, increasing oil prices is a double whammy,” Merchant West said.

Unaudited mid-month fuel price data released by the Central Energy Fund last week suggested that petrol may increase by 56 cents a litre at the end of this month, while the price of diesel may decrease by five cents and illuminating paraffin by one cent.

Motorists and consumers have already taken a battering from a surge in fuel prices since the beginning of the year. Petrol and diesel prices rose by 74c a litre and 91c a litre respectively last month on the combination of higher international oil prices and a weaker rand exchange rate.

Neil Wilson, the chief market analyst for Markets.com, said a decision by the US risks the prospect of an abrupt spike in prices if there is not enough supply to fill the gap.

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