According to an announcement from the Department of Mineral Resources and Energy, South Africa’s petrol prices will see a hike of 81c a litre on Wednesday, 1 December 2021. The price of diesel will also go up by between 72.5c a litre (0.05% sulphur) and 74.5c (0.005% sulphur).
1 December will also see the price of illuminating paraffin increased by 42.3c per litre, while the maximum LPGas retail price will be increased by 183.00c per KG, according to Media24.
This latest price hike, another in a long series of record-setting hikes this year, will push the price of petrol from around R19.50 a litre to over R20 in Gauteng and other landlocked provinces. Petrol prices have increased since the start of November by R1.21, while diesel increased by R1.48.
Fuel prices in South Africa are determined from international oil prices, as well as the Dollar-Rand exchange rate since SA buys its oil in USD. These latest price hikes are due in large part to the recent fall of the Rand to the Dollar. The exchange rate currently averages R15.85 to the dollar, compared to R14.72 the previous month. The average oil price also increased from $82.50 a barrel to $83.
The Rand’s weakening against the dollar can be attributed to the recent discovery of the Omicron variant of the COVID-19 virus in South Africa last week. The discovery has led to many countries imposing travel restrictions against SA, and it has also hurt SA markets.
“The key driver [of the higher oil price] is the higher global demand recovery amid a weaker supply response from non-OPEC and other oil producers,” the department said in a statement.
“There is a mismatch between demand and supply, i.e., there is more demand for oil products than the market can supply. The US and other major oil consumers are coordinating efforts to try to lower high prices by releasing oil from their inventory stocks, while OPEC and non-OPEC members are refusing to increase oil production to match the global recovery demand.”
Recently the US government has released millions of barrels of strategic oil reserves, but, the department noted, this had done little. The fluctuating price of oil due to the run-off effects of the pandemic has led to many countries experiencing record high petrol prices.
“It is important to appreciate that fuel prices are soaring worldwide due to persistently high crude oil prices,” the department said. “Record pump prices have been experienced in many other countries.”