Eqstra Fleet Management has revised its fuel budget recommendations to fleet managers for 2015 from 10% (recommended end November) to between 5 and 8% due to the recent drop in the fuel price price of R1.23 to R11.24 (95 unleaded).

“Since 2003, there has been a fuel price increase every year during the month of January as well as a 13% YOY increase. This year the fuel price confounded all our expectations.   Due to the price decrease on 7 January 2015, the fuel price in real terms has decreased by 17.17% compared to January 2013,” explained Murray Price, managing director of Eqstra Fleet Management.

The drop in the fuel price is largely attributed to the reduction in global crude oil prices which have dropped from $115 per barrel in April 2014 to around $50 per barrel (7 January 2015) – this being the lowest cost for four years.  Factors contributing to this reduction include the focus by OPEC on increasing its market share by maintaining production levels, thereby putting pressure on its competitors; a significant growth in US domestic crude oil production;  and slowing European and Asian economies with a subsequent fall in demand.   As a result, there is an oversupply of Brent crude oil in the market, and prices have dropped accordingly.