Motorists can hopefully look forward to a decrease in the price of petrol this August, though diesel users won’t be as lucky.
This is according to the mid-month data published by the Central Energy Fund (CEF), which indicates that South Africa can expect a mixed bag from August’s fuel price adjustments.
The discrepancy between the petrol and diesel adjustments is mainly attributed to the global oil price, which has gone through periods of volatility and recovery within the last few weeks.
As a result, petrol is currently looking at a reduction of between 20c and 24c per litre.
Diesel, on the other hand, is predicted to go up by roughly 62c per litre.
These are the mid-month fuel price adjustment estimations provided by the CEF:
- Petrol 93 – Decrease of 24 cents per litre
- Petrol 95 – Decrease of 20 cents per litre
- Diesel 0.05% –Increase of 63 cents per litre
- Diesel 0.005% – Increase of 62 cents per litre
It should be noted that these predictions are not the official changes that will be made by the Department of Mineral and Petroleum Resources next month.
The final changes could be higher or lower as they are also subject to potential changes in the Slate Levy, taxes, transport and storage costs, or wholesale and retail margins.
A turbulent market
The international oil market went through an unstable period in June as a result of geopolitical events, but has managed to find some stability this July.
Oil prices shot up to more than $80 per barrel at the height of the recent conflict between Israel, Iran, and the United States, but this has since dropped to below $70 per barrel following the ceasefire.
Unfortunately, motorists are not out of the woods yet, as ongoing geopolitical events may still influence the final price we’ll see at the pumps next month.
Traders have voiced their concerns over US President Donald Trump’s ability to pressure Russia over the war in Ukraine, potentially hindering Russian exports.
According to market analysts by Bloomberg, Trump has amped up military support for Ukraine to resist Russia’s offensive, and threatened to impose 100% tariffs if the hostilities do not end with a deal in 50 days.
The planned action effectively represents secondary sanctions on countries buying oil from Russia.
A few countries are still willing to buy oil from Russia, particularly India and China, which are serving as an economic lifeline for Moscow.
However, the market has noted a distinct lack of any immediate action in relation to Russia, and believes that secondary tariff threats will not be carried out, reported BusinessTech.
The other major factor that will influence South Africa’s fuel prices is the US dollar/rand exchange rate, which has come under pressure.
The rand is currently trading for R17.93 per dollar, but this may increase to more than R18 per dollar if the latter continues to recover its value.
The dollar’s value dipped as a result of the Trump administration’s concerted effort to penalise countries over trade deficits by applying punitive tariffs on their exports.
However, this trend is now expected to reverse as the US shifts towards favourable trade deals instead of the recent headbutting over tariff threats to various nations.
Negotiating better trade deals will improve the US economic growth outlook. A tariff war would harm it, said Investec chief economist Annabel Bishop.
“Uncertainty still persists on what the final outcome will be and for how long the extensions and negotiations will continue,” she said.
“While markets are relying on the ‘taco trade’ (Trump always chickens out), there is room for disappointment.”
Unfortunately, the tariffs are set to impact South Africa’s economy more directly next month when a 30% tariff is set to kick in on 1 August.
Loading ...
