By Lee-Yandra Paulsen
This week, fuel prices in South Africa dropped to their lowest level since February 2022. However, escalating tensions in the Middle East threaten to disrupt this downward trend. Brent Crude oil prices surged by over 6%, raising fears of potential oil supply disruptions. With crude oil prices already exceeding R1,200 per barrel, economists warn that worsening geopolitical instability could drive fuel prices higher in November, impacting both local motorists and the global oil market.
Automobile Association (AA) spokesperson, Eleanor Mavimbela, spoke to VOC Breakfast on Friday and explained the significant role of global events in influencing South Africa’s fuel prices.
“There are two main commodities that affect fuel prices in South Africa. We always watch the US dollar exchange rate, and we’re also closely monitoring international oil prices because these factors significantly influence local fuel costs,” she said.
Mavimbela elaborated, noting that while global markets have been observing the US dollar’s response to the Middle East conflict, there has been little fluctuation thus far. “So far, the US dollar exchange rate has remained stable, which is positive for us. However, our main concern is the international oil prices. Earlier this year, during a conflict in the Middle East, we saw how it affected global oil prices. Fortunately, OPEC [the Organization of the Petroleum Exporting Countries] has assured the world they have sufficient reserves, even if the conflict escalates.”
She highlighted that global oil prices are largely driven by demand, and any inability of OPEC to meet global demand could lead to higher fuel costs in South Africa.
“Oil prices will only increase if OPEC countries cannot meet the world’s demand for oil, which would then cause a spike in South African fuel prices,” Mavimbela explained.
Economists are keeping a close watch on both the US dollar and global oil prices, although there has been no significant change so far. “At the moment, nothing has shifted drastically, but we continue to monitor the situation closely,” Mavimbela added.
Reflecting on the recent fuel price decreases, Mavimbela warned that these reductions may not be sustainable in the long term. “As the Automobile Association, we’ve been saying that the decreases we’ve enjoyed over the past five months are not sustainable, given the two main commodities that drive fuel prices in South Africa. There’s so much happening in the Northern Hemisphere that affects us in the Southern Hemisphere, and we need to prepare for that. So that we won’t see ourselves going back to the high fuel price that we saw in the past two years,” she concluded.
VOC News
Photo: VOCfm
