Expect big fuel price increase in June

South Africans must prepare to pay around 52 cents a litre more for petrol and an additional 78 cents for diesel, the Automobile Association said.

This prediction is based on unaudited month-end data supplied by the Central Energy Fund but the actual increase, set to be announced later on Friday, should not stray far from the abovementioned figures.

“International petroleum prices continued their upward march during May and the weakening Rand / US dollar exchange rate has exposed the consumer to the full force of oil’s strength,” the AA commented.

Oil prices have been on the rise since late April, largely due to output reductions in Columbia, the US and Nigeria, while temporary power generation problems in Venezuela and the recent wildfires in Canada’s oil sands are affecting output from those countries, the AA said. On the other hand, experts abroad are of the opinion that a global over-supply could soon see prices pull back.

“With South Africa’s weak economy, our concern is that even if oil prices moderate, further declines in the rand will mask the benefit. It is also possible that fuel prices will test new highs in the coming months, placing yet more stress on consumers,” the association warned.