The Automobile Association (AA) said the weaker Rand and higher oil price would result in much higher fuel prices in South Africa.
“Fuel prices were already trending higher before the widespread looting and unrest of the past few day,” the AA said.
“But now, the daily Rand/US dollar exchange rate has spiked from R14.35 to nearly R14.80 since 12 June.”
South Africa imports a lot of fuel, which will inevitably cost more in Rand terms. Meanwhile, international oil prices remain on the advance, adding further pressure.
The mid-month data indicates that petrol is set for an increase of 87 cents a litre, diesel 58 cents, and illuminating paraffin 56 cents. The AA expects little respite before month-end.
The AA said that while the supply of fuel will not push the prices of fuels higher, the weakening Rand resulting from the riots will play a major role as the exchange rate is a key indicator for the local fuel price.
In a related development, South African Petroleum Refiners (SAPREF), which runs a massive refinery complex in Durban supplying 35% of South Africa’s refined fuel, has declared force majeure.
“SAPREF’s declaration of force majeure means that events beyond its control – the recent lawlessness – has forced it to shut down the refinery,” the AA said.
It warned that if an operational refinery were to be overrun by criminals, surrounding areas would be at great risk.
The Association advised motorists to avoid unnecessary journeys and to buy no more fuel than necessary, to preserve current stocks for essential and emergency services.