An attack in Saudi Arabia took a big chunk of global oil production offline – here’s why that might have no effect on South Africa’s petrol price
- An attack on Saudi Arabian oil facilities stalled 5% of global production, and caused the oil price to increase by close to 20%.
- An economist believes if the oil price recovers and the rand remains strong, the attack might not have an impact on the local petrol price.
- This is because the price decline set for SA's petrol price will compensate for the higher oil price, keeping the price the same.
- Visit Business Insider SA's homepage for more stories.
The South African petrol price may remain the same in October after an attack on Saudi Arabian oil refineries disrupted global oil production, an economist said.
Ten drones hit Saudi oil facilities on Saturday stalling 5% of the world’s oil supply - the worst sudden disruption to world oil market ever.
In response to the attack, the international oil price jumped by close to 20% on Monday morning.
Hugo Pienaar, chief economist at the Bureau for Economic Research at Stellenbosch University, said the oil price jump will wipe out the petrol price decline set for South Africa.
The latest data from the Central Energy Fund (CEF) showed that the South African petrol price - set once a month - was expected to decline by almost 11c a litre due to a stronger Rand.
“If the Rand remains strong, and if the oil price recovers in the days ahead, the 11c decline could compensate for a higher oil price, leaving the petrol price in October the same,” Pienaar told Business Insider South Africa.
“But if the Rand deteriorates or the oil price remains exorbitantly high, it can see local petrol prices increase.”
The strength of the Rand heavily affects the South African petrol price as the country imports oil in US Dollars.
“If the Rand continues to strengthen against the US dollar it may further reduce the impact on South African consumers.”
Bloomberg reported that Saudi Arabia’s oil company Aramco is aiming to restart a significant portion of the stalled oil production within days, but will require weeks to restore full output capacity.
South Africa’s Automobile Association spokesperson Layton Beard said they believe the attack on Saudi oil refineries will have a negative impact on the petrol price.
Beard, however, said it is still too early to make a prediction.
“The latest data from CEF reflects what happened in the markets last week. We will have to see tomorrow what the impact of the attack had on South Africa’s imports,” Beard told Business Insider South Africa.
“Both the oil price and the South African rand is extremely volatile so it is impossible to make a prediction on what will happen in the days and weeks ahead.”
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