Ricochet News

Motorists in for a massive petrol price decrease in July - AA

Jun 20, 2017
Motorists in for a massive petrol price decrease in July - AA

After motorists got a 25c reduction on every litre of their petrol in June, predictions are that there is an even bigger fuel price decrease in July.

According to the Automobile Association (AA), which was commenting on unaudited mid-month data released by the Central Energy Fund (CEF), this is because the Rand has remained firm amid an oil price decline.

“The rand remained mostly stable against the US dollar in the first half of June, with strength in the currency contributing three cents a litre to the drop,” the association said.

“The big move was from oil, which shrugged off OPEC’s production quotas to drop by around eight percent since the start of the month.”

Thus, the AA added, motorists could be getting a petrol price decline of between 60 and 64 cents a litre with diesel showing a 60 cents reduction and illuminating paraffin 57 cents.

 However, the association said the fuel price could increase if the three ratings agencies downgrade Rand-denominated debt to junk status.

“That could trigger substantial capital outflow, almost certainly leading to Rand weakness which will be heavily negative for the fuel price,” the AA said.

“Barring unexpected political or economic shocks in the lead-up to the next ratings reviews, we expect fuel price movements to mainly depend on international petroleum prices."