Petrol price heading for a big cut in April - AA

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Astron Energy's Cape Town refinery supplies Caltex petrol stations.
Astron Energy's Cape Town refinery supplies Caltex petrol stations.

Rand weakness against the US dollar has paled into insignificance against the fuel price bonanza caused by the massive retreat of international petroleum prices, setting the stage for large reductions in fuel prices at month-end, the Automobile Association (AA) said in a statement on Friday.

The current data shows petrol down by up to R1.11 a litre, diesel by R1.10 and illuminating paraffin by R1.18. However, these declines must be weighed against the 25 cent increases to the fuel levies, which come into effect in April.

This means a cut of around 86 cents a litre for petrol, and up to 85 cents a litre for diesel. The levies are not applied to paraffin.

Oil plunged from above $50 to around $35 this week after Saudi Arabia lowered its oil prices – presumably to undercut its competitors, particularly Russia – which refused to lower output under a proposed Opec deal – and the US shale gas industry.

"The last time oil prices dropped this suddenly was in the first Gulf War, almost 30 years ago. However, it means good news at the pumps for South Africans.

The AA says it doesn't believe the declines will end at their current levels.

"There is little indication of what the final picture of COVID-19 spread will be, nor where the Rand will stabilise against the dollar. It can also not be predicted how long the Saudis are prepared to hold out in their oil price war, since their oil industry is believed to be able to maintain profitability at substantially lower per-barrel prices than the current level," the AA notes.

The AA says it foresees an extended period of turmoil.

 "It will take quite some time for the global economy to get back on an even keel after the current ongoing events, and the next two or three months seem set to provide some fuel price relief to hard-pressed motorists," it concludes.

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