In a dynamic turn of events in the energy market, even with the recent increase in oil prices, a potential fuel price decrease in June remains a distinct possibility. International oil prices, which initially witnessed a significant surge earlier this week, have now stabilised. This has opened the door for what could be modest yet meaningful cuts to fuel prices in the upcoming month.
According to the latest data from the Central Energy Fund, there are indications of possible price cuts. Petrol could see a reduction of around 40 cents, while diesel might experience a steeper cut of approximately 75 cents. However, this optimistic outlook comes with a caveat. Should oil prices persist at their current levels, these potential savings could be significantly diminished by the end of the month. Projections suggest that the petrol price cut could shrink to around 15 cents, and the diesel cut to about 40 cents.
On Wednesday, Brent Crude oil prices lingered near two – week highs, trading at around US $66 per barrel (R1,207). This price point is still slightly lower than the $66.40 average during the previous review period, which played a crucial role in determining the current fuel price structure. Interestingly, while oil prices have a relatively minor impact on the fuel price outlook for June, the rand has emerged as a saving grace. So far this month, the rand has been trading at an average of R18.38 to the US dollar, which is notably stronger compared to the previous review period’s average of R18.83.
The recent rise in oil prices has its roots in the changing geopolitical and economic landscape. In early May, oil was trading around the $61 mark, but late last week, it started to climb. This upward movement was spurred by optimism stemming from the easing of tariff tensions between China and the US. However, experts caution that the positive impact of the 90 – day trade truce may not be long – lasting. Joseph Dahrieh, Managing Principal at Tickmill, warns that once the truce expires, it could potentially bring back market instability. Additionally, any further oil price hikes could be offset by increased supply. The oil cartel OPEC+ has signalled its intention to maintain elevated output levels. Dahrieh also pointed out that geopolitical tensions remain a wild card, as traders closely monitor developments in various regions, such as Iran. A positive outcome in Iran could lead to additional oil volumes entering the market, further influencing prices.
Looking at the bigger picture, South Africans have experienced a relatively stable year in terms of fuel prices so far. Currently, in Gauteng, a litre of 93 Unleaded petrol costs R21.29, with 95 ULP retailing at R21.40 inland and R20.60 at the coast. These prices follow earlier reductions. At the start of the month, 95 ULP saw a price cut of 22 cents per litre, and 93 UPL was reduced by 21 cents. Diesel prices also dropped, with decreases of between 41 cents (50ppm) and 42 cents (500ppm). Prior to this, petrol prices were cut by between 58 cents and 72 cents in April and seven cents in March. In fact, 93 ULP is currently only 17 cents more expensive than it was in January, highlighting the overall stability in fuel prices over the past few months despite the ongoing fluctuations in the global oil market.
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