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Oil running to nearly US$90 per barrel has pushed fuel prices sharply higher, and the trajectory looks set to continue.
The increase in the petrol price of 53 cents a litre and that of diesel of 80 cents a litre from Tuesday (February 1) had the Automobile Association (AA) describing the rise in oil prices as “ominous”.
“The major factor in the latest hike is the rapid strengthening of benchmark crude oil prices to nearly US$90 a barrel. The last time Brent crude touched current levels was in October 2014, more than seven years ago,” the AA said following the latest monthly adjustments in the prices of petrol, diesel, paraffin and gas.
“A combination of factors is pushing oil higher, not least the imbalance between supply and demand as the lower-than-expected economic impact of the Omicron Covid-19 variant pushed economic activity higher, and crude production lags.
“In addition, there are political jitters around the Ukraine, which could see a switch to increased oil use throughout the EU if Russia restricts natural gas output in response to sanctions threatened by the USA and United Kingdom,” said the AA.
“The February increases will push fuel prices in SA close to the record highs experienced in December 2021. — Moneyweb
Online Reporter