JOHANNESBURG, Oct. 5 (Xinhua) -- South African motorists and consumers face another economic blow this week as the Department of Mineral and Petroleum Resources announced major monthly fuel price increases on Monday, set to take effect this Wednesday.
Driven by ongoing conflict in the Middle East and rising global crude costs, with Brent crude climbing above 100 U.S. dollars a barrel during September, the department confirmed that petrol prices will increase by between 3.12 rand (about 0.19 U.S. dollars) and 3.33 rand per liter, while diesel will rise by 2.84 to 3.24 rand per liter.
In its statement, the department highlighted that average Brent crude oil prices rose from 87.89 to 101.00 dollars per barrel over September as U.S.-Iran tensions escalated and threatened oil transit through the Strait of Hormuz.
The exchange rate provided minimal relief, as the rand appreciated slightly against the dollar, averaging 16.21 in September.
The steep price hikes come roughly a week after the South African Reserve Bank raised its benchmark repurchase rate by 25 basis points, coupled with annual inflation reaching 4.4 percent in September.
Commenting on the wider economic fallout, Azar Jammine, chief economist at Econometrix, an independent economic consultancy, warned that South Africa remains highly vulnerable to geopolitical shocks due to its import dependency.
"We are an oil importer. Worse than that, we have seen a deterioration in our fuel refining capacity over the last decade, making us even more dependent on imported refined fuels than in the past," Jammine told Xinhua in an interview.
"The entire economy will suffer as a consequence, and job creation will be negatively affected. At present, there seems to be very little scope for a major growth upswing," he noted.
