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Fuel prices are set for hefty rises at month-end if current trends continue. This is the word from the Automobile Association (AA) which was commenting on unaudited mid-month fuel price data released by the Central Energy Fund.

“It’s been a good month for the Rand so far, with the local currency picking up around 15 cents against the US dollar, but the basic fuel price has shot up since the start of December, raising the spectre of quite substantial fuel price rises if there isn’t a pullback before month end,” the AA says.

“Diesel and illuminating paraffin are the worst hit, with the current data showing an increase of 52 cents a litre for these fuel types. But petrol hasn’t escaped unscathed, with increases of up to 34 cents a litre on the cards,” says the AA.

The AA says that the increases come despite significant global refining overcapacity, and a slight increase in the world-wide oil supply alongside falling demand. The Association also notes the International Energy Agency’s comments regarding optimism that an effective vaccine for COVID-19 may accelerate the economic recovery from the pandemic.

“Although the IEA does not expect a significant impact before the second half of 2021, we would not be surprised if optimism over the vaccine has been behind recent oil strength. Further strength might be on the cards if the vaccination plan shows large-scale effectiveness,” the Association concludes.

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