Crude Oil File Pic Oil prices have softened after reaching five-month highs earlier in January. File picture: Waltraud Grubitzsch/ dpa via AFP.
Image: Waltraud Grubitzsch/ dpa via AFP
International oil markets are facing uncertain times in the wake of Donald Trump’s Presidency and its potential disruptions to international supply chains.
In mid-January the price of Brent Crude oil hit a five-month high of $82 per barrel (R6,280), after steadily rising through the month. Given that oil averaged $72.80 in December, there has been a significant under-recovery in the local fuel price calculation, which will lead to petrol and diesel price increases in February.
This past week, Brent Crude softened to around $76, briefly testing $74; however, this comes too late in the month to significantly mitigate the fuel price increases expected next month.
The latest daily snapshot released by the Central Energy Fund (CEF) is pointing to petrol price increases of 83 cents for 95 Unleaded petrol and 90 cents for 93 Unleaded, and this outlook is unlikely to change significantly in the coming days. Diesel, meanwhile, is looking set to increase by between R1.02 (50ppm) and R1.07 (500ppm).
Given the above predictions, the price of 95 petrol is likely to rise to around R21.63 at the coast and R22.42 inland in February, with 93 ULP landing around the R22.24 mark.
According to Reuters, the softer oil prices seen in the past week are due to rising stockpile in the US, however the market is set to remain volatile as investors come to terms with Trump’s tariff threats as well as US sanctions on Russian-produced fuel.
“Considering the many prevailing uncertainties, we think a prudent approach is still warranted," said UBS analyst Giovanni Staunovo.
"While we expect prices to stay supported at current levels, news flow related to Trump is likely to drive volatility in the near term."
The US Federal Reserve holding interest rates steady this month, is another potential factor as lower borrowing costs are needed to boost economic activity, and thus demand for oil.
Assuming oil remains steady around its current level, South Africans could see some stability in fuel prices following February’s price hikes.
IOL