The Automobile Association has warned South African motorists to brace for further "daunting" fuel price hikes at the end of October.

"International oil prices remain stubbornly high and it is possible that current tensions involving Saudi Arabia, one of the world's biggest oil producers, could place more pressure on fuel prices,” the AA said in a statement, commenting on unaudited mid-month fuel price data released by the Central Energy Fund.

“More welcome news is that the rand is working in South Africa's favour, and the recent firming of our currency against the US dollar has taken some of the bite out of oil's rally," the Association added.

However, the AA warned the potential price hikes were “still daunting”, particularly for diesel users. Petrol prices were set for a 40 cents-a-litre increase, while diesel and illuminating paraffin could spike by 70 cents and 65 cents, respectively.

The Association said the predicted increase to the price of petrol should be seen against the backdrop of the Department of Energy’s proposal to set a maximum price for the sale of 93 octane ULP and LRP fuels.

“Should this happen, it will allow fuel retailers to set their own prices below the maximum amount indicated by government, and may, depending on the margins, ease the burden on users of the two identified fuels. It must be stressed, however, that we did not participate in the drafting of the proposal, so details on its possible implementation remain unclear to us,” the AA added.

However, the Association said it welcomed the government’s efforts on the issue of rising fuel prices, and that the Department of Energy had requested input from industry stakeholders. It said the proposal looked to be “consumer-friendly”, and that the detail would clarify how this would work once all the feedback was received.

The AA said the country could not “continue to be hammered by large fuel price hikes without severe economic knock-on effects”.

"The effect on bus and taxi operations could lead to fare hikes which exceed commuters' ability to pay," the AA said.

"We again call on government to prioritise economic policies which inspire investor confidence. A stronger and more stable rand is the country's only defence against the vagaries of the international oil price," it concluded.

Original article from Car