The escalation of Israeli-Hamas tensions into a full blown war over the weekend sent oil prices climbing once again, sparking fears of further fuel price hikes.
Granted, those fears are not unfounded and it is difficult to predict how the conflict will affect oil markets in the coming weeks, but as it stands on October 10, lower fuel prices could be on the cards for November.
The latest daily snapshot from the Central Energy Fund shows an over-recovery pointing to potential price cuts of over R1.60 for both grades of petrol, and up to 30 cents for diesel, and the latter could creep closer to R1 if the current daily price trends persist throughout the month.
But how did those calculations turn positive in spite of the Israeli war?
As a result of the conflict, Brent Crude Oil prices rose by around 4.6% between Saturday and Tuesday, from $84.4 per barrel to $88.3. However the previous week saw the commodity fall by about 11%, marking its biggest weekly decline since March this year, on recession fears and another partial lifting of Russia’s fuel export ban, Reuters reported.
This means oil is still less expensive than it was in October, when it broke through the $90 dollar mark and peaked at over $94 late-month.
Although oil seems to have settled around the $88 mark, which should keep us in a state of over-recover barring any currency shocks, next month’s fuel price hopes come with a big disclaimer as a lot can transpire by month-end.
"The most serious outcome for crude is that the conflict escalates into a more devastating proxy war which could affect crude supply," senior oil trader Rebecca Babin told Reuters.
Accusations that Tehran helped Hamas plan the raids have stoked fears that Israel could hit major crude producer Iran, which would send prices surging, AFP reported.
Given the possible volatility ahead, it could be too early to accurately predict October’s fuel prices, but as it stands at the time of writing, lower prices are certainly looking possible.
Any relief could be seen as too little and too late, though, given that South Africans have endured months of steep price increases, including hikes of between R1.08 and R1.96 in October.
The cost of 93 Unleaded petrol, for instance, has increased by R3.16 per litre in just three months, while the wholesale price of 50ppm diesel went up by a whopping R5.40 over the same period.
As a result, refuelling a bakkie or large SUV with 70 litres of diesel now costs R378 more than it did in July, while the cost of a 50 litre refuel in a midsize petrol-powered SUV like the Haval Jolion has gone up by R158.