The unexpected skirmish initiated by Hamas on Israel from the Gaza Strip last weekend triggered a surge in oil prices by over 3%, raising concerns about the potential ramifications on November’s petrol prices, especially in regions far removed from the Middle East conflict like South Africa.
Israel war could impact November petrol prices – Here’s how
The Central Energy Fund (CEF) of South Africa has already provided an early forecast for the coming month’s fuel prices, indicating a noteworthy rise.
While Israel and Gaza are not significant petroleum producers, the stability of oil prices is contingent on the conflict remaining localised.
Industry pundits argue that a significant adverse impact on oil prices would only manifest if the tension escalates to a broader regional war, drawing in the US, Iran, or other allies of the warring factions.
Iman Nasseri, the Middle East managing director of energy consultancy Facts Global Energy, had earlier elucidated to CNBC,
“The impact on the oil price will be limited unless we see the ‘war’ between the two sides expand quickly to a regional war where the US and Iran and other supporters of the parties get directly involved.”
Early forecasting suggests another slump at the pumps
As per the early projections compiled by the Central Energy Fund (CEF), the petrol prices in South Africa for November 2023 exhibit a significant increment.
Based on the provided data, the Basic Fuel Price (BFP) as of Friday, 6 October 2023 for different types of fuel in South African cents per Litre (SA c/l) are as follows:
- Petrol 95 ULP: 1,263.434 SA c/l
- Petrol 93 ULP and LRP: 1,221.593 SA c/l
- Diesel 0.05%: 1,486.847 SA c/l
- Diesel 0.005%: 1,514.910 SA c/l
A notable aspect is the Unit Over/(Under) Recovery for each type of fuel as of 06/10/2023:
- Petrol 95 ULP: 231.836 SA c/l
- Petrol 93 ULP and LRP: 227.677 SA c/l
- Diesel 0.05%: 175.783 SA c/l
- Diesel 0.005%: 168.120 SA c/l
The Unit Over/(Under) Recovery values are significant as they indicate the difference between the BFP and the price at which the fuel is sold, which could be influenced by factors like international product prices and exchange rate movements.
In the analysis movement of average Over/(Under) Recovery, the data points to a rise in international product prices and a slight decline in the exchange rate from Friday, 29 September 2023 to Friday, 6 October 2023.
This data suggests a negative outlook concerning the prices of petrol in November 2023, potentially due to the heightened tensions in the Middle East.
The rise in international product prices, as shown in the data, is a clear indication of the upward pressure on fuel prices. Given this trend, it is likely that the price of petrol in November 2023 may increase from the prices as of Wednesday, 4 October 2023.