Fuel prices are set for a substantial drop at the beginning of September, but motorists should be alert to the underlying fundamentals.

This is according to the Automobile Association (AA) which was commenting on unaudited fuel price data released by the Central Energy Fund (CEF) this week.

“Petrol is set for a drop of between 71 and 77 cents a litre, diesel will be lower by 50 to 53 cents, and illuminating paraffin down by about 56 cents,” the association said.

“But the rand’s weakness against the US dollar has been expensive for motorists; fuel prices would have dropped by an additional 25 cents a litre if our currency had remained at its late-July levels.”

International petroleum prices have recently reached six-year lows, and the AA expressed concern over what trajectory the oil price might take when it reaches the bottom of the cycle.

“If and when the oil price flattens out, or increases, motorists will be fully exposed to any rand weakness,” the AA said.

The rand briefly weakened to an all-time low of R14 to the dollar earlier this week, but has since recovered to approximately R13.13 against the buck in morning trade on Friday.

The Department of Energy is expected to announce September’s prices on Friday, to be implemented at midnight on 2 September.

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