Mines and energy ministry’s petroleum economist Abednego Ekandjo says that at least for December fuel consumers are safe.
The mines and energy ministry on Friday announced that diesel prices will decrease by 125 cents per litre and petrol prices will remain unchanged. This is set to be effective as of 7 December 2022.
The economist has warned that as European oil sanctions against Russia are due to kick in on 5 December this could spell trouble in the near future.
Last month diesel prices went up by N$1.98 per litre while petrol prices remained unchanged.
“We managed to increase by 125 cents and we are keeping petrol prices unchanged. Consumers must enjoy their festive season considering that there are no increases this time around,” Ekandjo said, adding that the decision to reduce diesel prices is that their analysis shows that the barrel price for diesel has decreased.
The new fuel prices at Walvis Bay will thus become N$22.85 per litre for diesel and will remain N$20.08 per litre for petrol.
He said the Russia-Ukraine conflict is still playing a role in oil prices.
On 4 December 2022, the organisation of the Petroleum Exporting Countries (OPEC) and its oil-producing allies agreed to stick to their output targets.
This decision was made a day ahead of the planned implementation of two measures aimed at hitting Russia’s oil revenues in response to its invasion of Ukraine.
In June, 27 countries of the European Union agreed to ban the purchase of Russian crude oil from 5 December 2022.
“As of tomorrow the Europeans are going to impose further sanctions on Russian oil,” Ekandjo told The Villager.
This, he said, will create problems for the global oil market.
In a media statement on Friday, the mines and energy ministry said a mixture of rising Covid-19 cases in China, ambiguity about the G7 oil price cap and a rise in USA oil stocks have put downward pressure on oil prices over the course of November 2022.
“The oil price cap is scheduled to come into force on the 5th of December 2022, and the oil markets are still in limbo as far as the finer details on the price cap are concerned,” said Ten Eshoshange Hasheela, the ministry’s chief public relations officer.
Hasheela said although the members of the European Union recently met to find consensus on a joint oil price cap, the negotiations broke down as members failed to agree on the best price point.
Recent reports indicated that the G7-proposed oil price cap level would be in the range of U$65-70 per barrel, substantially higher than initially assumed.
According to Hasheela, these developments have pushed oil prices lower over the period under review.
The latest calculations by the ministry indicate that the average price for unleaded petrol 95 over the period from 1 to 25 November 2022 is at U$105.863 per barrel which is said to be a moderate increase of about U$5 over the review period.
“Additionally, the average price for diesel 50ppm over the period from 1 to 25 November 2022 is at USD131.260 per barrel, a significant decrease of about USD11 per barrel over the review period,” she said.
Hasheela said the exchange rate figures for the same period indicate that the Namibian dollar appreciated against the US dollar at N$17.5082 per US dollar.
This is compared to N$18.1048 per US dollar at the end of October 2022.
“This currency appreciation contributes to fuel price over-recoveries and has an ultimately positive effect in terms of the pockets of local fuel consumers.”
She stated that the ministry recorded a combination of a low under-recovery on petrol and a high over-recovery on diesel.
“An under-recovery of nine cents per litre on petrol and an over-recovery of 125 cents per litre on diesel,”she added.
Hasheela concluded that the ministry will continue to monitor the market closely and prescribe fuel prices that are in line with the metric indicators of the oil market to ensure that the country always has an adequate supply of fuel.