Further decrease in diesel price expected

The diesel price is expected to drop by more than R1/l next month, bringing the total decrease in price to more than R2/l since the beginning of 2015.

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At the start of January, the department of energy announced that the diesel price would decrease by just over R1/l. This saw the price of diesel drop to roughly R10/l on the coast and R10,30/l inland.

During January the Brent crude oil price continued to trade at low levels, setting the scene for further fuel price cuts, said Wandile Sihlobo, an economist at Grain SA.

“Petrol and diesel prices are expected to respectively decrease by R1,10 and R1,09 per litre on 4 February,” he said in a statement.

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The diesel price cut could translate into massive savings for farmers. Dawie Maree, an economist at Agri SA, told Farmer’s Weekly that for every 10c decrease in the diesel price the farming sector saved R1 billion in direct costs over a 12-month period.

The domestic fuel prices were mainly influenced by the international prices, as well as the exchange rate movements, said Sihlobo.

The significant decrease in oil prices was due to increased supplies from Saudi Arabia, as well as increased shale oil production in the US. Furthermore, slow economic growth in the Euro Zone and China resulted into a decreased demand for oil, thus further adding to price falls, said Sihlobo.