Could the petrol price be set to fall at the beginning of August?

The oil price has come down over the month so far. This is raising hopes that the petrol price will follow after hikes over the past few months.

But the Automobile Association (AA) warns against motorists pinning hopes on the petrol price coming down as the rand continues to trade at weak levels against the dollar.

Let's take a closer look at what could lie in store for the price of petrol at the start of August…

A lower oil price could translate into a lower petrol price

At the beginning of this month, motorists had to cough up over 40c a litre more for petrol. This came just a month after the petrol price rose 49c a litre.

Yet according to data released by the Central Energy Fund, motorists could be looking at a drop of “29c a litre” on 5 August, reports IOL. The Department of Energy will only confirm what’s happening with the petrol price next Friday.

A potentially lower petrol price is thanks to the lower price of Brent crude, which has fallen as a result of the stronger dollar, says BDLive. “As a net importer of crude oil,” this is good news for South Africa as “about 95% of its requirements are met by imports from the Middle East and Africa”.

A senior researcher with Solidarity Research Institute, Paul Joubert, expects the price of petrol to fall “by about 30c per litre come August,” notes Business Tech. And diesel could fall by as much as 60c a litre.

A weaker rand could curb the impact of a lower oil price

But the AA is less optimistic about what lies in store for the petrol price at the start of next month, reports All Africa. The association points out that the “exchange rate picture is less positive as the rand has weakened “against the dollar since the end of last month”.

The AA advises “motorists to maintain a prudent stance towards their fuel expenditure,” notes Times Live.

So whilst indications are looking positive for the petrol price falling next month, with well over a week to go until the Department of Energy announces its decision, the situation could very well change.


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Tags: petrol price, lower petrol price, oil price, weaker rand, rand dollar