South Africans will need to fork out R1.46 per litre more for both 95 octane and 93 octane petrol from midnight (effective Wednesday, March 2), and will also have to brace themselves for even higher fuel prices in April – with international crude oil prices spiralling above the $100 a barrel mark last week.
The Russia-Ukraine conflict is largely to blame for the spike in the oil price. If world oil prices stay at current levels or soar further, the petrol price in South Africa is likely to top a new record of R22 or even R23 per litre in April.
March’s petrol price increase will see the inland price of 95 octane hitting R21.60 a litre, while for coastal provinces it will cost R20.88 per litre.
“For the first time in history 95 octane petrol inland will rise above R21 a litre, and by a significant margin,” the Automobile Association (AA) said in a statement on Monday.
Its statement followed the Department of Mineral Resources and Energy publishing the expected fuel price increases for March at the weekend.
The AA also noted that the price of 95 octane at the coast will “for the first time” breach the R20 per litre level.
Besides the hike in petrol prices, diesel is set to increase by between R1.44 and R1.48 a litre, while illuminating paraffin will increase by R1.21 per litre.
The ramifications for South Africans and local businesses will go beyond just stomaching these hikes. Economists are warning that surging oil prices will further fuel inflation, which is already at the top end of the SA Reserve Bank (Sarb) target range.
Genera Capital investment strategist Adrian Saville said in an SAfm Moneyweb Market Update interview on Monday night that the Russia-Ukraine conflict is already having an impact on SA, especially on the oil price front.
“One of the most obvious pass-through mechanisms is the oil price that will fall through in the form of what we call imported inflation,” warned Saville.
“What we haven’t seen is our currency move in terms of rand weakness or rand vulnerability; the rand has been, relatively speaking, quite stable.
“There are two very obvious threats [for SA from the Russia-Ukraine situation] and the one is in the form of oil prices and the other in the form of a weak currency, where we could get contagion through emerging markets’ shared weakness.”
“The rouble has shown just how volatile this could be and, if the rand were to move in sympathy with that we would have a double whammy to petrol prices, with that feeding through to inflation,” said Saville.
Although the spiralling world oil price is an exogenous factor adding more fuel to SA’s medium-term inflation, the spike is likely to also add further pressure on the Sarb to hike the repo rate by an even higher margin when its Monetary Policy Committee (MPC) meets later this month.