The widely anticipated rise in fuel prices is set to be curbed following a decision by members of the Organisation of Petroleum Exporting Countries (OPEC) to increase production a move likely to reduce prices of crude oil on the global market.
During his appearance before the Parliamentary Portfolio Committee on Mines and Energy this Monday (yesterday) to explain the fuel price situation in the country, Reserve Bank of Zimbabwe Governor, Dr John Mangudya cited the persistent rise in oil prices on the international market as a contributory factor to prices increases.
This Wednesday (today), OPEC revealed that it will ramp up production in order to increase supply, a move widely expected to drag the oil price increases, notes Mr Kipson Gundani, a macro economist.
“OPEC members rely heavily on oil exports so they cut production so as to put pressure on prices to go up. The decision to revise production upwards will see prices going down to the dictates of supply and demand,” he said.
Crude oil prices decreased by US$5 from a three and year half peak of US$80 per barrel as of May 17.
“Motorists should not panic for any future fuel prices because this move will have a knock on effect on fuel prices locally,” said Mr Gundani.
Realising that fuel is a key cost input in production, the government reduced customs duty on fuel imports in February this year which led to fuel prices going down but this was eventually offset by rises in crude oil prices on the global market.
Fuel consumption in Zimbabwe has risen by a massive 30 percent year on year since January 2017 leading to some service stations across the country running dry.
The RBZ has since doubled forex allocation on fuel imports by 100 percent.