A steady climb in global oil prices has pushed a flat to marginal cut in petrol prices for February into a small hike.
According to the latest daily snapshot on over- and under-recoveries for fuel prices by the Central Energy Fund, petrol prices have moved from an early-January cut of up to 12 cents per litre, to a potential hike of 2 to 8 cents per litre.
More positively, diesel prices are still set to come down next month, with the CEF showing an over-recovery of 11 to 16 cents per litre.
While the relatively stable rand is still providing some support for local fuel prices, global oil prices have climbed higher since the start of the month, reversing energy users’ fortunes.
Nedbank economists noted that oil prices eased early this week after Saudi Arabia cut its selling price by $2 a barrel, but they have since rebounded.
According to economists at the Bureau for Economic Research, the swing in oil prices is tied to recent developments at the Red Sea.
“Following the seizure of an oil tanker off the coast of Oman this week, there are some concerns that the threats to shipping could be spreading to the Gulf,” the BER said.
An initial spike in oil prices December came after BP announced it would halt oil shipments through the Red Sea – however, the price had come down back below $80/barrel as supply did not seem to be impacted as much by the attacks as initially feared, delivering a small cut in fuel prices in January.
Now the oil price has jumped once more after news broke that the UK and US carried out targeted strikes against the Houthi rebels that seized the tanker.
“An escalation could risk the price increasing more significantly as it remains highly sensitive to tension in the broader Middle East,” the BER said.
Nedbank echoed these sentiments, saying that uncertainty persists around where oil prices are heading next.
Markets will be keeping a close eye on the oil price as it has not only an impact on fuel prices but also a wider impact on inflation, generally. (Business Tech)
