South African motorists can expect a petrol price hike at the pumps next month; however, the continued strengthening of the rand could offer some light at the end of the tunnel by month’s end.
This is based on data from the Central Energy Fund for the second week of September, which showed fuel price recoveries for petrol are still in the red.
The data outlined that petrol prices are building for a 13 to 21 cents per litre hike at the current pace, while diesel is projected to drop by 9 cents per litre.
Below are the expected increases and decreases for fuel prices at the end of September’s second week:
- Petrol 93: increase of 11 cents per litre
- Petrol 95: increase of 19 cents per litre
- Diesel 0.05% (wholesale): decrease of 9 cents per litre
- Diesel 0.005% (wholesale): decrease of 9 cents per litre
- Illuminating paraffin: decrease of 12 cents per litre
The global oil price is the primary factor contributing to the under-recovery of petrol and the over-recovery of diesel.
This contributes to the cost of international product prices, which are used to refine petrol, then feed into the under-recovery of the basic fuel price.
Oil has recently fluctuated between $62 and $67 a barrel since the start of August, while Brent Crude Flat has hovered around $66 a barrel.
Global tariffs have resulted in reduced demand for oil as well, leading to its weakness in 2025.
The upsurge in supply from OPEC+ increasing output to the market, has also impacted the situation, with Bloomberg noting that geopolitical disruptions could influence the supply; however, it has mostly been countered by a worsening market outlook.
The International Energy Agency (IEA) has indicated an even greater oil surplus in 2026, while US economic data shows a surge in jobless claims.
This has fuelled concerns that the labour market in the world’s largest economy is weakening, further adding to the geopolitical risks and problems that oil traders are struggling with.
“On the one hand, we have this surplus emerging in the market,” Toril Bosoni, head of the oil markets division at the IEA, said in a Bloomberg TV interview. “But we’re also seeing the risk to supply.”
That said, there is a silver lining to the situation with analysts at Citigroup outlining that the market is caught in a “tug-of-war between increasingly bearish fundamentals and heightened geopolitical risks.”
However, its forecasts indicate Brent will drop into the low $60 range by year-end and into 2026, which should help lead to lower local pricing.
Rand growing stronger
The rand/dollar exchange rate is contributing to an over-recovery in pricing across the market, adding 6 to 7 cents per litre.
The rand has also shown surprising resilience against major global events, such as the US imposing a 30% trade tariff on South African exports to the United States.
On the other hand, the dollar has weakened, which is believed to be the result of the US economy being under pressure.
Thanks to this and the rand’s resilience, it has steadily strengthened against the foreign currency.
This has included breaking through the R17.50/dollar resistance level this week, following US consumer inflation data being released, while looming rate cuts pushed it under R17.40/dollar.
These factors have led to the rand trading much stronger than expected.
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