With the announcement that the country has slipped into a technical recession, it is not all doom and gloom for South Africans with the announcement that petrol prices are set to decrease. The Mineral Resources and Energy Department has announced the adjustment of fuel prices, effective from midnight.
This is all thanks to a decrease in Brent crude oil prices. The main reason for the lower oil prices is due to lower demand triggered by the spread of the coronavirus.
Oil prices have, in the last three months, slumped by 19%. The spread of the coronavirus has added to investor and traveller concerns pushing the demand of crude oil further down.
However, on Monday, hopes of OPEC cutting output boosted oil prices by over 2% from a multi-year low.
All grades of petrol will decrease by 19 cents a litre, diesel will go down by 54 cents a litre, while paraffin decreases by 68 cents a litre and LP Gas by 32 cents a litre.
In the video below, Department of Minerals and Energy’s Robert Maake says if the rand did not depreciate against the dollar, prices could have dropped even further:
Economists at First National Bank say the latest drop will also provide relief for farmers.
“The latest drop in the petrol and diesel price will provide relief for consumers. The cumulative decrease in diesel so far this year will help limit the impact of expected fuel levy increase of 25 cents per litre in April 2020. Given that 70 % of food is transported by road the decrease is likely to have a positive impact on food inflation, easing pressure on consumers already struggling to make ends meet,” says CEO of FNB Cash Investments Himal Parbhoo.
Economists say farmers are increasingly using petrol and diesel for back-up generators in light of the current power supply challenges.