Namibian motorists should brace for more fuel hikes in the coming months, with the local pump price expected to breach the N$20 a litre mark, increasing to as high as N$30 per litre if oil prices continue on an upward trend, economic analysts have warned.
Simonis Storm Economist Theo Klein expects local fuel prices to reach levels of between N$23 to N$25 per litre and a high of above N$30 per litre should global oil prices surge past US$ 150 per barrel.
“We do not see a ceasefire or peace treaty being signed between Russia and Ukraine in the near future. Ceasefires have been signed in the past (the so-called Minsk agreements), but terms set out in those agreements were never met by both Russia and Ukraine. So, any agreement signed soon will not necessarily bring an end to a 300-year to-and-fro battle between Russia and Ukraine. We therefore believe that global oil prices will continue to rise and could potentially reach US$140 to 150 per barrel in the coming the months. Since Namibia is a net importer of petroleum oils, we will have to adjust local petrol prices upwards,” he told The Brief.
Oil prices soared to their highest since 2008 at US$129/barrel due to delays in the potential return of Iranian crude to global markets and as the United States and European allies consider banning imports of Russian oil.
FNB Namibia Group Economist Ruusa Nandago said fuel prices will be impacted by the oil price increase, with the possibility of breaching the N$20/l mark, depending on the Russia, Ukraine conflict.
“It is possible that fuel prices could breach the N$20/litre mark, however, this is highly contingent on the evolution of the Russia-Ukraine tensions.Given the oil price movements above USD100/barrel mark over the past few weeks, we expect that this will filter through to Namibian fuel prices given that we are an importer and price take of international oil prices,” she told The Brief.
PSG Namibia Research Analyst, Shelly Louw, also forecasts further local fuel price hikes.
“The price of Brent Crude oil is up by 86.6% over a one-year period. Last week Tuesday on the 1st of March the prices of diesel and petrol were increased by more than N$1.00 in Namibia in response to higher global oil prices. Since the fuel price increase last week, the price of Brent crude oil is up by 21.2% (at time of writing). That said, I do believe we will see further fuel price increases locally,” she said.
IJG Securities Head, Danie van Wyk, said Namibia in the short-term is highly likely to experience more fuel price increases, particularly if global oil prices remain at current levels or continue on an upward trend.
“It is nearly impossible to forecast how long the oil price will continue on its current trajectory or if (or when) it will revert back to the levels seen last year, as the situation in Ukraine (and the sanctions on Russia by extension) change on a daily basis. Thus, to say whether local fuel prices will definitely breach N$20/litre or where it will top out is very difficult at this stage,” he said.
The Ministry of Mines and Energy last month increased fuel prices by N$1.20/litre for petrol and diesel by N$1.30/litre.
The price hikes brought fuel prices for Windhoek to N$17.57/litre for petrol and N$17.71/litre for diesel.
Motorists in neighbouring South Africa are already paying over R21 per litre of petrol inland after the country’s energy department announced a R1.46 per litre increase that kicked in on 2 March 2022.
Daily petrol price data from the country’s Central Energy Fund (CEF) shows South Africa is on track for a petrol price hike of between R1.88 and R1,93 at the end of March, although this could still climb further if global oil prices continue to climb.
