Image via Adobe Stock
Image via Adobe Stock
In the past 24 hours, the cost for a barrel of WTI oil was in a negative balance – meaning suppliers, for the first time in history, were having to pay clients to accept delivery and take the product off their hands. The oil crash is another scalp claimed by the ludicrous nature of 2020 – and it will have an impact on South Africa’s petrol prices.
When you can get a barrel of oil for less than what you’d pay for a bottle of Coke, something is broken. With more than half of the world in lockdown, the demand for a once-precious commodity has slumped to dangerously low levels. Many nations have used this lull to top up their reserves, but even that has reached a limit.
So, with the oil crash temporarily making gasoline seem worthless, how will this affect South Africa and its petrol prices next month? The news for motorists is good, but we haven’t really got anywhere to go…
Yes, we expect that this oil crash will continue to push our petrol price down even further. Coming off the back of a monthly drop, fuel costs look set to decline by almost R2 per litre in May as well. The AA has told motorists to expect a second month of record-breaking prices…
“World commerce has all but collapsed. Even assuming a fairly rapid end to the global health crisis, it will take many months for the economy to work up a new head of steam, and possibly years before it returns to normal. We expect it to be a long while before substantial oil price hikes are a reality.”
“In any other circumstances, the rand’s crash of 17% against the dollar in six weeks would see SA facing a massive fuel price hike. Instead, we are set for another large drop. Coming in the wake of March’s record fuel price reductions, South Africa is probably set for a second month of record fuel price drops for some fuel types.”AA statement
Although we’re expecting another historic decrease, the impact will be mitigated. Around 30% of what South Africans pay for their fuel goes towards fuel levvies and other taxes. Furthermore, we are more reliant on Brent Crude than we are WTI oil – and the former hasn’t plunged into negative territory.
Hell, if the rand was a little stronger, we could expect to see some truly mind-bending monthly drops. Alas, its 17% decline against the US dollar since the start of March has prevented SA from reaching fifth gear.
11. What will happen tomorrow?! Firstly, tomorrow the prices won’t be negative. You look towards the next set of contracts (June expiry).— Koshiek Karan (@iamkoshiek) April 20, 2020
12. Will the petrol price come down? Yes but our ZAR is weak and there’s a ton of taxes + levies AND we’re less exposed to WTI.
Information correct as of 9:00 on Tuesday. Both have shown improvement overnight: