Economist eyes 35c/l drop in petrol price
The price of petrol should drop about 35 cents per litre (c/l) when the central energy fund releases the latest petrol and diesel prices on Friday.
Efficient Group economist Dawie Roodt said that although the rand was weaker, the oil price was dropping, so a cut of about 35 cents per litre was on the cards.
He expected the price of diesel to drop by about 20 cents per litre.
Earlier, the price of Brent crude for December delivery dropped to $59,02 per barrel, the lowest point since February 2007.
This was in spite of the announcement by the Organisation of Petroleum Exporting Countries (Opec) last week that it would cut output by 1,5-million barrels a day to 27,3-million barrels starting in November in an effort to halt falling prices.
“Opec produces only 40% of the world’s oil. And the actual number of barrels is only part of the equation—what’s important is demand.
“Of course the supply side is significant, but more significant is world demand—which is slowing down,” Roodt said.
He added that Opec had learned an important lesson.
“You don’t reduce production too much as people will seek alternatives. If the price falls, you don’t cut back on production as you’ll lose market share.”
Roodt said that Opec had overestimated its importance.—Sapa