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Big fuel price increases on the cards as oil prices hit eight-year highs

File picture: David M Parrott / Reuters.

File picture: David M Parrott / Reuters.

Published Jan 27, 2022


International - Although the South African Department of Energy has not yet released information about next month’s fuel prices, it is widely expected that motorists will be hit with big increases for both petrol and diesel.

“After some reprieve on the domestic fuel price front in January, the renewed rise in the oil price is likely to result in another hefty fuel price increase in February,” The Bureau for Economic Research said. Many analysts are expecting an increase of more than R1 per litre, which would push petrol prices beyond the R20 mark again.

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Brent crude oil on Wednesday broke through the $90 per barrel mark to strike the highest level in almost eight years. The market has been rattled by geopolitical tensions in Ukraine and supply concerns in the Middle East. European benchmark Brent North Sea crude rallied as high as $90.42 in afternoon London trade, attaining a level last seen in October 2014. At the time of writing (Thursday), Brent Crude was trading at $89.96.

"This has been coming for a while and even over the last week when prices were easing a little, there was little hope that it would lead to any kind of significant pullback," OANDA analyst Craig Erlam told AFP. "With the price now above $90 and gathering momentum once more, it may just be a matter of time until it's flirting with $100.

"The fundamentals (of supply and demand) remain bullish for oil prices and the prospect of a Russian invasion of Ukraine will only increase the risk premium."

95 Unleaded petrol currently retails at R18.89 at the coast and R19.61 in the inland regions, where 93 Unleaded costs R19.36. However, the February increases are expected to push petrol prices well beyond the R20 mark.