Motorists, who were in line for a cut in the fuel price of 11 cents a litre, are now likely to see a much smaller cut after the drone attacks on Saudi Arabia’s petroleum facilities last weekend.
South Africa imports 40% of its crude from the region, say experts, but the strikes have raised international prices so other imports from sources such as Nigeria and Angola will be affected too.
On Saturday, an attack on two major Saudi Arabian oil facilities knocked over 5% of the world’s oil supply. The attacks set Abqaiq, a processing centre, and the Khurais oil field, ablaze, affecting more than half of Saudi’s crude oil production and saw oil prices hiking by 20%.
The United States has blamed Iran for the attack, but the Iran-backed Houthi militias in Yemen have claimed responsibility.
The University of Pretoria’s Danny Bradlow said the bigger picture is not yet clear.
“We do not know how bad the damage is and how long it will take to fix,” he said, cautioning that what happens in that area is very important because South Africa sources its crude oil from there.
Saudi Arabia has large oil reserves, which it can access to fill the gap, said Bradlow, but added that if it does not fill the shortfall, it’s possible that prices will rise further.
Automobile Association (AA) spokesperson Layton Beard said two main factors influence the oil price in South Africa: the rand-dollar exchange and international petroleum prices.
The petrol price is set once a month and announced by the department of mineral resources and energy.
Motorists were looking forward to lower fuel prices; Central Energy Fund (CEF) data released last week indicated a likely drop of 11 cents a litre for 95 octane and 25 cents for 93 octane petrol next month.
Beard still expects a decrease, but less than earlier expected.
The AA forecasts 95 octane will drop by 5 cents a litre and 93 octane by 20 cents.
Sanisha Packirisamy, economist at Momentum Investments, said: “South Africa’s heavy reliance on Saudi Arabian oil imports could negatively affect the price of fuel, given the significant dent to Saudi’s oil supplies following the attack.”
Packirisamy added that “a rise in geopolitical risks could see the international price of oil picking up and emerging market currencies selling off as risk appetite abates”.
Tshegofatso Mathe is an Adamela Trust business reporter at the Mail & Guardian