Fuel prices up as geopolitical tensions bite
Zimbabwe Energy Regulating Authority (ZERA), on Tuesday announced new fuel prices as geopolitical tensions continue to hamper supply in the world, as well as the reopening of the Chinese economy from severe Covid – 19 lockdowns.
Petrol now costs US$1,73 per litre from US$1,68 per litre in May representing an increase of US$0.05 per litre.
Diesel price per litre gained US$0.02 from US$1,74 in May to the new price of US$1.76 per litre in June.
Since the turn of the year, the country has seen diesel prices increase by US$0.38 per litre and petrol price per litre rise by US$0.32.
In a bid to reduce fuel prices, the country reintroduced the mandatory blending of petrol with ethanol but the prices have continued to rise as world prices increase.
Fear is of an increase in basic commodity prices, as a result of the fuel price adjustment. Economist Dr Prosper Chitambara said, “No doubt the prices of basics will also spike in response to increases in gas prices. Yes, prices were being adjusted already, but they have to reflect the new shock in fuel prices.”
Fuel lands in Zimbabwe at a total cost of US$1.032 per litre of diesel and US$1.023 per litre of petrol. The fuel is taxed up to US$0.447 per litre which constitutes 26.7 percent of diesel total price and 26.8 percent of petrol total price.
Economists have called that the price of fuel should be reduced through tax reduction in order to cushion motorists.
“They know what needs to be done, taxes need to be cut but I believe they will not do that because that will also affect the country’s foreign currency income and we are in short supply of foreign currency as a country,” Chitambara added.
Down in South Africa, petrol prices have been on the rise as well with the most recent fuel increase of R2,43 per litre of petrol and R1,10 per litre of diesel being announced on the first of June.
As a result, fuel is now at a staggering R23,52 (US$1.53) per litre of petrol and over R22.15 (US$1.44) per litre of diesel.
In the region, Malawi and Zimbabwe have the highest fuel prices of US$1.82 and US$1.73 per litre of diesel respectively.
Angola which produces oil has the lowest price per litre of US$0.38. According to Fitch Solutions, global average price per litre stands at US$1.35. International oil prices topped US$120 a barrel on Monday driven by Saudi Arabia raising its July crude prices.
According to the CNBC.com, brent crude touched an intraday high of US$121.95 per barrel before trading down 0.5 percent at US$118.23.
Analysts at the US bank, Stanley Morgan expect the sluggish price action to be shortlived as Beijing and commercial hub Shanghai have been returning to normal in recent days after two months of painful lockdowns to stem outbreaks of the Omicron variant.
Top oil exporter Saudi Arabia raised the July official selling price for its flagship Arab light crude to Asia by US$2.10 from June to a US$6.50 premium over regional prices.-eBusiness Weekly
