Petrol set to hit R6/l
The last time petrol was over R6 a litre was in October last year. In November 2005 the price dropped from R6.03 a litre to R5.72 inland.
On Monday, oil prices set a new record of $71.40 a barrel on worries about falling US gasoline stocks and the possibility of attacks by the US against Iranian nuclear facilities, reports AFP.
At the close, Brent North Sea crude traded for $71.12 a barrel, up from the closing level on Thursday in London of $70.57, but down from an intraday high of $71.40.
On Monday, New York's main contract light sweet crude for May delivery was up 50c at $69.82 a barrel from its close of $69.32 in US trading on Thursday, but on Tuesday oil prices extended gains to approach record highs amid heightened supply worries.
Geopolitical risks
Analysts said oil prices were likely to climb as long as geopolitical risks linked to Nigeria and Iran posed threats to supply at a time when global demand remains strong and supplies remain tight.
Light, sweet crude for May delivery rose 30c to $70.70 a barrel in Asian electronic trading on the New York Mercantile Exchange. The contract on Monday jumped $1.08 to settle at $70.40 a barrel, a record close.
Oil prices were approaching the intraday record high of $70.85 set on August 30, when Hurricane Katrina lashed at the US Gulf Coast and wreaked havoc on the region's oil industry. The contract closed that day at $69.81.
The oil price then dropped sharply to $55 in February, but has been climbing continuously since then.
The production of Nigerian crude are being hampered by militants stopping the transport of at least 500 000 barrels a day.
This could have a significant impact on the oil market because Nigeria is the world's 12th biggest producer of oil, and the biggest African exporter of crude to the US.
Although there hasn't been any disruption to Iran's oil exports, problems could occur should the UN impose sanctions on one of the world's biggest oil producers.
Iran remained defiant on Tuesday, saying it will not be bullied by the US into dropping its nuclear program, reports CNBC Europe.
Under-recovery 30c
The pump price of 93-octane inland is currently R5.61 a litre. The latest recorded under-recovery, the amount by which the price is to be increased in May, is 30c - unless there is a significant drop in the oil price.
The effect can however be softened if the rand strengthens significantly against the dollar. Analysts expect the rand to strengthen from last week's R6.14/$ on the strong gold price.
On Tuesday, the gold price came within $2 of $620 an ounce as investors bought into safe-haven commodities amid concerns over Iran, and as the oil price reached record highs.
An analyst expects the rand to strengthen to between R6.08 and R6.15 to the dollar this week, but this can change should the euro win further ground against the greenback.
In international trading on Monday, already the rand traded at R6.10/$ after the euro climbed to $1.2236.
Posted by: www.SouthAfrica-CarHire.com
