Bullish international oil prices are setting the stage for yet another hefty hike in fuel prices.
This is according to the Automobile Association (AA), which was commenting on unaudited mid-month fuel price data released by the Central Energy Fund.
The association says the current picture shows month-end increases of up to 56 cents a litre for petrol, 47 cents for diesel, and 41 cents for illuminating paraffin.
The AA says oil prices advanced at a leisurely pace during January, but the increase has quickened since then.
It says international oil product prices shot up by around eight per cent in the first two weeks of February.
The AA notes that the rand/US dollar exchange rate has worked in South Africa’s favour, with the local currency strengthening around eight cents against the US dollar in February, although this has been far from enough to offset the oil price.
The association concluded that if oil continues on this trajectory, South Africa’s fuel prices might edge back into record territory in the medium term.
Fuel users also remain vulnerable to economic shocks which might weaken the rand.
However, the rand hurdled the key technical level of R14.50 against the US dollar on Monday morning on its way to a one-year best as signs of a local economic rebound and continued stimulus in the United States lifted demand for the currency.