Malawi Energy Regulatory Authority (Mera) says it is monitoring the global trends in oil prices, observing that the impact of the development on local pump prices will be assessed to determine if it is significant enough to warrant price revision.
Mera spokesperson Fitina Khonje said this yesterday in a written response in reaction to a 17.3 percent jump in global oil prices currently at $81 (about K66 339) a barrel from an average about $69 (about K56 511) a barrel in November last year largely pushed by growing demand for the commodity despite the new Covid-19 threat and lower production in some oil-producing countries.
She said: “For now, we will have to wait for a price review, especially in this case where there have been evident fluctuations in the global oil process owing to several reasons.”
In October 2021, Mera maintained pump prices of fuel after an assessment of the effect of the movement of free-on-board (FoB) prices, the exchange rate of the kwacha against major trading currencies and changes in local factors such as inflation.
Petrol remains at K1 150 per litre, diesel at K1 120 per litre and kerosene (paraffin) at K833.20 per litre.
Meanwhile, available figures show that international oil prices have been increasing lately, with Brent crude, a global benchmarket price for purchases of oil worldwide, rising to an average of $73 per barrel in the third quarter of 2021 from $68.60 per barrel in the second quarter.
The increase was attributed to several factors, including growing demand for the commodity following economic recovery and seasonal factors as winter approaches in the northern hemisphere, uncertainties around the outcome of the Opec-plus meetings and the global energy crunch as China grappled with energy supplies.
The World Bank has since projected that global oil prices are expected to continue rising.
In its latest Malawi Economic Monitor, the Bretton Woods institution indicated that the consequent increase in domestic fuel prices would spill over to higher prices for other goods and services, which has already occurred with the recent 28 percent adjustment of fuel.
When making its price determination, Mera assesses the combined effect of the movement of the FoB prices and kwacha exchange rate against the dollar as well as changes in local factors that determine the maximum pump prices.
In the just-ended year, the kwacha has been volatile, losing ground against all major trading currencies, including the dollar, a development which necessitated an increase in local pump prices recently.
Fuel prices have a knock-on effect on the cost of transport, goods and services, which in the long-run impact inflation.