Saudi Arabia- The South African government has urged Saudi Arabia, one of the world’s largest oil producers, to increase production in a bid to arrest soaring fuel prices.
President Cyril Ramaphosa coming from a state visit in Nigeria is now on another state visit to Saudi Arabia. On Thursday he met with Saudi King Salman bin Abdulaziz al Saud, and Crown Prince Mohammad bin Salman, who is next in line to the throne.
The meeting comes with growing anger and dissatisfaction in South Africa over constant increases in thr petrol price. Its now priced at R16 per litre for the first time in inland areas this month. Energy minster Jeff Radebe confirmed that oil prices were part of the high level talks.
Radebe said, “It has a very important bearing on the price of oil. That is why we are looking to oil-producing countries to put more oil in the market so that the price of oil can go down, so that we can be able to mitigate against the negative impact of the hike of fuel prices in South Africa.”
There are a couple of reasons why South Africa’s petrol price has reached records, it is the combination of a weaker rand, higher global oil prices, and higher fuel taxes.
A year ago benchmark Brent Crude was about $47/$ per barrel. On Thursday afternoon it was trading at $74.26/bbl.
The inland price for a litre of 95 octane unleaded petrol rose to a record R16.02 at the start of July. The coastal price is R15.43. Analysts warn prices are expected to increase again in August.
Government is under pressure from consumers who are struggling to meet their needs and for government to try and reduce the cost of petrol, which is expected to lead to an increase food prices.
Opposition parties have called for government to increase petrol reserves and consider freezing or decreasing the fuel levy.
Energy minister was aware of the outcry, “We have heard a lot of outcry from South Africans, we want to see the oil price coming down,” Radebe said following the meeting.
South Africa imports 47% of its oil from Saudi Arabia.
Ramaphosa is on a three country visit to bolster economic relations with oil-producing countries.
After his visit in Saudi Arabia he will travel to United Arab Emirates on Friday to meet with Sheikh Mohammed Bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi.
Ramaphosa on Thursday secured a pledge of $10bn (about R133bn) in investment from the Saudi Arabian government, which is expected to be invested into South Africa’s energy and power generation sectors.
The investment is part of Ramaphosa’s ambitious $100bn investment drive over the next five years to kick start SA’s struggling economy.
According to the deal, about R12bn of the R133bn will go to renewable energy projects.
Radebe was very pleased with the agreement, he described the investment pledge as “fantastic”.