Petrol price expected to drop next month


Petrol pump

Petrol pump

JOHANNESBURG - There was good news for motorists on Tuesday, with the Automobile Association (AA) predicting a fuel price drop next month. 

In a statement, the AA said a resilient rand rand decline in the oil price meant drivers could be looking at a decrease of between 60 and 64 cents a litre for petrol at month end, 60c/l reduction for diesel and 57c/l drop for illuminating paraffin.

"The rand remained mostly stable against the US dollar in the first half of June, with strength in the currency contributing three cents a litre to the drop," the AA said.

"The big move was from oil, which shrugged off OPEC's production quotas to drop by around eight percent since the start of the month," the statement read.

READ: Oil prices dip further amid demand slowdown

It followed a fuel price drop in June, of 25c/l for petrol.

But, the AA warned the price of fuel could increase again if the three major ratings agencies downgraded rand-denominated debt to junk status in future reviews.

"That could trigger substantial capital outflow, almost certainly leading to rand weakness which will be heavily negative for the fuel price," the AA said.

"Barring unexpected political or economic shocks in the lead-up to the next ratings reviews, we expect fuel price movements to mainly depend on international petroleum prices," it said.