The Automobile Association (AA) has predicted that fuel prices will rise substantially in June.
It said that fuel demand has dropped significantly during the COVID-19 pandemic.
“The global lockdowns under COVID-19 saw fuel demand plummet. The resulting oversupply left storage bunkers full, with the extraordinary outcome that oil prices in the USA briefly dipped below zero,” said the AA.
However, demand is now set to increase as economic activity increases globally.
Additionally, while crude oil prices had fallen in alignment with the reduction in demand, these crude oil prices are now also on the rise.
“This is not unexpected, and South Africans should remember that the fuel price is currently around four Rand per litre lower than it was before the COVID-19 crisis hit,” said the AA.
It added that South Africans are actually lucky that the price rise isn’t higher.
“Fortunately, the rand has strengthened during May, which has helped insulate the country from some of the rise,” said the AA.
The following fuel price changes have been predicted by the AA:
- Petrol – R1.18 per litre increase
- Diesel – 22 cents per litre increase
- Illuminating paraffin – 41 cents per litre increase
The AA also highlighted that while the diesel price increase is relatively low, it is possible that motorists may suffer in a different way – through short-term diesel shortages.
“The economy has recovered more rapidly than expected, leading to a dramatic increase in the demand for diesel which refineries are currently not able to meet,” the South African Petroleum Industry Association (SAPIA) confirmed.
The AA said that some rationing is currently taking place to mitigate this, while diesel supply is expected to normalise by the end of May when both Durban refineries reach on-spec production levels.
“We advise motorists to be pragmatic and anticipate fuel prices slowly returning to their previous levels over the medium to long term,” said the AA.
“It would be prudent to budget accordingly.”