“The Middle East lies near many of the world’s key oil producers, and petroleum prices have historically been sensitive to instability in the region.”
The Rand also weakened slightly against the US dollar in the first half of April, but the AA points out that the spike in international petroleum prices accounts for nearly the entire rise in fuel prices predicted by the mid-month data.
“On the current data, petrol is set for a rise of 41 cents a litre, diesel 48 cents, and illuminating paraffin 38 cents. In all of these increases, the movement in the exchange rate accounts for just four cents of the rise,” notes the AA The predicted increase in May comes on the back of a 72 cents increase in April meaning, if it materialises, that fuel prices will have increased by more than one Rand in the space of two months.
The AA says prolonged instability in the Middle East could drive international petroleum prices higher. “Several foreign powers have now taken a position in the Syrian civil war. If tensions escalate, or the war itself drags out even further, the outlook for oil prices would become more negative. South Africans should be aware that their fuel budgets might come under renewed strain in the short to medium term,” the Association concludes.