Windhoek — As of midnight tonight motorists will have to brace themselves to fork out 28 cents per litre more for 93 Octane Lead Replacement petrol and 25 cents per litre more for 95 Octane Unleaded petrol.
The new pump prices at Walvis Bay, the port of import, are N$10.62 for 93 Octane and 10.72 for 95 Octane. Diesel however remains unchanged at N$11.04 per litre. According to the Kahijoro Kahuure, Permanent Secretary in the Ministry of Mines and Energy, the prices of petrol and diesel, which hovered at between US$120 and US$126 respectively, were heavily felt by the oil companies particularly as the exchange rate between the Namibian dollar and the US dollar depreciated to over N$9 during the last days of January.
"The local market, therefore, pulled through with under-recoveries in January, which would have to be passed on to consumers to recover the cost incurred," explained Kahuure in a statement. As for the future of oil prices, the PS feels that individual markets around the world are still worried about the bubbling Middle East, which is home to the largest oil reserves on the planet, as well as North African tensions.
These include violent protests in Egypt, a terrorist attack in Algeria and the uprising in Mali. These events have all raised the geopolitical risk premium embedded in oil prices. Algeria produces 1.2 million barrels of oil per day, neighboring Libya produces 1.5 million barrels per day, while Egypt produces a mere 700 000 barrels a day.
However, the Suez Canal and Suez-Mediterranean pipelines, which are controlled by Egypt, are significant choke points in the global oil supply chain. Mali produces no oil, but a conflict in that country poses an imminent threat to oil production in that region.
"Surprises are common occurrences in the global oil market and its volatility remains a concern. An improving global economy and a relatively stronger demand for risky assets helped drive crude oil prices up throughout January," according to the Ministry of Mines and Energy.