DURBAN - The price of fuel is expected to have drastic increases during the December festive season.
The increase in the fuel price is due to the progressive rise in the crude oil price and the additional weakening of the exchange rate, economist Fanie Brink said.
Recent information from the Department of Energy, indicates that the price of gasoline (ULP & LRP) will likely increase by 71,9 cents in Gauteng on the 6th of December. The price of diesel, with sulphur content of 0,005%, could see a 61,1 cent price hike.
Overseas analysts have said that the average daily price of brent crude oil has surged to it s highest level since June 2015 when brent crude oil was $64,27 a barrel.
Representatives of the Organisation for Petroleum Export Countries and Russia will meet again this week. Where the decision regarding an extension of their 9 month deal that was reached in July this year will be made. The deal was made in order to bring about a better balance of supply and demand by decreasing its oil production.
Due to the further surge in the crude oil price, it is expected that the average international price of gasoline will increase by 45,7 cents per litre and the price of diesel ti increase by 34,3 cents per litre.
The daily average dollar/rand exchange rate has weakened over the past month from about R/$13,80 to R/$14,20 due to political instability and further economic deterioration that has resulted in a further downgrading in South Africa's credit last week.
This weakened exchange rate is expected to cause a hike in the price of gasoline and diesel by 26,2 cents and 26,8 cents respectively.
- BUSINESS REPORT ONLINE