After the long financial month that was January, South African motorists will have to take another look at their budget sheet for February. Even though it has not yet been confirmed, new economic data shows that a “painful” petrol price hike can be expected for Wednesday.
Will February break a new petrol price record?
Last week, Price Waterhouse Cooper (PWC) published a forecast, predicting that February would not be looking good. And despite petrol prices dropping at the start of January, a substantial hike is now expected.
With all relevant knowledge and information, PWC is foreseeing that prices will reach R20 per litre again.
“The nature of fuel price fluctuations suggest that it is only a matter of time before the R20/litre barrier is breached again. In the third week of January, international oil prices climbed to a seven-year high, suggesting fuel prices will again increase in early February.”
“Fuel costs form part of a larger challenge faced by companies to optimise their energy usage and supply chains. With fuel prices set to continue rising in 2022, South African companies must raise the bar on supply chain efficiency, agility, and resilience to meet customer demands in the most cost-effective manner.” – PWC statement.
Why are the prices set to raise so drastically?
Due to international oil prices now being at the highest value since 2015, some experts are speculating that fuel costs could be raised by more than R1 per litre in the first week of February.
And since SA imports the majority of its fuel, the global markets dictate our fuel prices. The South African Rand (ZAR) also suffered “a terrible week” which also plays a role in petrol prices.
The Bureau for Economic Research (BER) explained: “The stronger dollar weighed on selected precious metal prices, with the platinum price particularly hard hit, and the Rand exchange rate: The Rand had a terrible week, losing around 3.5% against the dollar.”
Another reason why South Africans will be suffering is due to the “geopolitical standoff” between Russia and Ukraine – which hugely affects the price of crude oil.
“The geopolitical standoff between Russia and Ukraine has been a key driver of higher global oil prices in recent weeks. The 1-month Brent crude oil futures ended last week above $90/bbl, bringing its year-to-date gains to almost 16%.”