Warning about diesel prices in South Africa

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Although petrol and diesel prices in South Africa are normally closely aligned, this trend has changed in recent months. Diesel prices are expected to rise despite the expected drop in petrol prices.

The most recent data from the Central Energy Fund shows that gasoline prices will fall by as much as R1.20 per liter in October, but diesel prices appear to be rising by 25 to 31 cents per litre.

Andre Botha, senior dealer at financial consultancy TreasuryOne, said this disparity between petrol and diesel is due to the ongoing conflict in Europe, which is fueling global demand for diesel.

If the eurozone crisis continues and supplies from oil-producing countries don’t increase, South Africa could see global demand for diesel soar “for a while,” he said.

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Botha said the main difference in diesel and petrol prices comes down to supply and demand.

“Many market players have been buying diesel in the short term due to the lack of supply, as well as the current energy crisis in the Eurozone as winter approaches,” he said.

“Diesel is used to generate electricity and is also the fuel of choice for production machinery. Now that the market is looking for certainty for diesel, supply is king and due to high demand, suppliers are selling diesel at a premium.”

Botha said that to curb high diesel prices would require either a major change in the Russian conflict or an increase in supply from other countries.

But even with alternatives being explored, it will take time for any changes to manifest in the market – so diesel prices are likely to remain under pressure in the near term.

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The financial expert said recent developments in the oil market would also have a direct impact on inequality, which is likely to manifest itself in fuel adjustments next month. The oil price has fallen from its highest level of $140 a barrel earlier in the year and is now hovering below $100 a barrel.

Warnings of higher diesel prices have been heard since early September, with Debt Rescue CEO Neil Roets saying that the increase in diesel demand and subsequent price increases will be passed on to consumers – not just in terms of self-filling. diesel. car, but also in the goods produced by means of diesel dependent production.

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Peter Morgan, the CEO of the Liquid Fuel Wholesalers Association, added that more specifically, domestic diesel prices are directly related to the following global factors:

  • Fuel sales numbers abroad
  • Inventory levels in different jurisdictions
  • OPEC’s behavior
  • Geopolitical issues

Morgan predicts that by the end of 2022, the country will see demand patterns return to the 2019 figures, where about 13 billion diesel was sold, compared to 11 billion petrol in the year.

During the pandemic, inequality widened with sales of diesel falling to 12.5 billion (less 1.5 billion) compared to gasoline, which fell to 9 billion (2 billion less).


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