Although drivers of diesel cars can expect some relief come midnight, a petrol price increase signals added pain for some drivers.
The diesel price will be cut by 47.5 cents to 73.5 cents a litre on Wednesday, according to the department of mineral resources and energy. But drivers of petrol vehicles will endure a 37 cents a litre hike.
Global crude oil prices have fallen significantly since the over 10-year high they soared to in May last year, when they neared $120 a barrel. On Tuesday, West Texas Intermediate crude futures held below $76 a barrel. This was as investors mulled the prospect of prolonged interest rate hikes in the United States and Europe and grappled with growing recession fears and lingering uncertainties regarding Chinese demand.
The US Federal Reserve and European Central Bank are set to raise interest rates again this week, with tighter financial conditions expected to throw cold water on growth. Meanwhile, China’s economic recovery appears to be losing momentum, according to Nedbank’s economists, who noted that the official NBS manufacturing purchasing managers index unexpectedly fell to a four-month low in April.
With the fates of some of the world’s biggest economies still in the balance, energy demand is expected to suffer. To shore up the market, the Organisation of the Petroleum Exporting Countries is set to cut output this month.
Meanwhile, at close to R18.50 to the dollar, the rand has held at its weakest level since 2020, adding to inflation pressures.
Last week, the Automobile Association (AA) commented on the upcoming petrol price increase, which at the time was expected to climb by more than 50 cents a litre.
“The decrease to diesel and paraffin prices is certainly good news, especially as the country enters colder months,” the AA said.
“But the increases to the petrol prices will add more strain to already stretched budgets, and consumers are advised to revise their budgets accordingly. There is no doubt these are difficult times, and petrol price increases will come as bad news for many who will have to dig even deeper in their pockets to keep mobile.”
