Market analyst from ETM, George Glynos, says that South Africa's record petrol price may rise again by around 30 cents a litre next month as oil prices are set to remain "stubbornly" high.

"We used to think oil might come back, but it's a very tight market – the dynamics are too tight for anybody's comfort," he emphasises.

Glynos says supply side fears abound and all it will take is a titbit of negative news from one of the Middle East, Nigeria, Venezuela or over American stocks for another rally to be sparked.

Dow Jones Newswires reports US markets tumbled on Wednesday as the price of oil soared to a record near US$124 a barrel and touched off concerns that the stock market's recent gains might have been premature. SA's JSE and rand have sold off in sympathy.

An under-recovery of 13.729 cents

Glynos explains that while today's Department of Minerals and Energy fuel price report stipulates an under-recovery of 13.729 cents per litre, this is only an average price.

"What you need to do is look at the daily price, which tends through the month to drag the average price if oil increases or the rand weakens," he explains.

Glynos says his modelling currently assumes this scenario – or at least no better that the current rand/oil dynamic - and therefore the higher expectation of another increase of around 30 cents.

"We are still comfortable that the price increases by about 30 cents – but in the worst case scenario it might be worse," says Glynos.

Last week Glynos noted that the "very strong" increase in the retail price of petrol in South Africa will have knock-on effects "all over the place".

Knock-on effects on interest rates

"The inflationary knock-on effects are most obvious, which will also have knock-on effects on interest rates," he said.

SA's retail price of petrol increased by 55 cents a litre on Wednesday this week, taking the price to new all-time highs.

This came after an increase of 68 cents in petrol the month before.

The increase was higher than expected due to a 25 cents increase in the slate levy.

ETM is expecting two more increases of 50 basis points in the interest rate, which currently sits at 11.50 percent.

A major bugbear at the moment is the price of crude oil and food for inflation. Brent crude futures were last at $122.11 a barrel from $122.32 overnight.

I-Net Bridge