Zimbabwe and its southern neighbour, South Africa, have independently resolved to increase fuel prices in tandem as Brent Crude prices, exchange rate movements and taxes move against their favour. Benchmark Crude Oil gained 1.68% from US$68.29 per barrel on the ninth of August 2021 to US$69.44 on the ninth of September 2021.
Brent Crude has shaken off a tough pandemic ravaged year to see prices return to pre-pandemic levels in the second half of 2021. This is attributed to the OPEC+ oil cuts and the recovery in production in the world, which has spurred demand. In the month of August the commodity hit a low of US$62.14 per barrel before recovering to US$69.99 per barrel.
This saw the Zimbabwe Energy Regulatory Authority (ZERA) adjust its pump prices on Thursday with immediate effect. Diesel 50 was up 0.75% both in local currency and USD terms. It increased by $0.86 to $115.15 per litre from $114.29 and by US$0.01 to US$1.34 from US$1.33 in both currencies.
Petrol also saw slight increases in prices as it was up 1.15% and 0.73% in local and USD terms, respectively. Blend moved up by $1.35 from $117.07 to $118.42 in local currency and now retails for US$1.38 after it was hiked by US$0.01 from US$1.37 in USD terms.
The increases came eight days after South Africa had issued a statement on fuel effective 2 September 2021. According to the Automobile Association, the reason that the expected petrol decrease didn’t materialise is because the retail margins have been increased by 5 cents a litre, in order to accommodate a wage increase for fuel attendants, while the Slate Levy had seen an 8 cent hike. The AA said that this was only announced after the late-month data, which the original prediction had been based on, was published.
The AA said the softer oil prices came as a result of OPEC cutting production: “International petroleum prices continued their gradual retreat during August, having pulled back by around ten percent since the start of the month. We attribute this mainly to the Organisation of Petroleum Exporting Countries (OPEC) cartel, which increased oil production gradually during the first half until previous production restrictions were removed”.
Brent Crude oil was trading at R71.63 at the time of writing, while the rand was listed at R14.43 to the dollar. Should these trends continue, a modest price cut could be on the cards for October, although a far bigger reduction would be necessary to take the current burden off motorists and commuters – Harare