Good news for petrol prices this October

Lower international oil prices and an improvement in the rand/US dollar exchange rate have reversed the expected petrol price hikes for October.

At the start of the month, the Central Energy Fund’s (CEF’s) data indicated that South Africa was due for a 20c per litre hike for both grades of petrol.

However, the CEF’s latest data indicates that motorists will receive a small measure of relief, depending on the type of fuel they use.

Petrol 93 is now expected to receive no changes, while petrol 95 will receive a fractional bump of 8c per litre.

Diesel users are benefitting the most this time around, albeit with a small reduction of around 10c per litre.

The CEF’s latest data indicates the following changes to the price of various fuel types for South African motorists for October –

• Petrol 93 – no change
• Petrol 95 – increase of 8 cents per litre
• Diesel 0.05% – decrease of 10 cents per litre
• Diesel 0.005% – decrease of 8 cents per litre

While these changes are certainly better than the previous estimates, it’ll undoubtedly be of little comfort to the average motorist, given how imperceptible the adjustments are in practice.

Favorable conditions

The improved fuel price adjustments are primarily the result of a drop in global demand for oil as traders lower their outlook for the year in the wake of US tariffs.

This means that economic growth is slowing down in many countries, leading to less demand for fuel.

At the same time, the Organisation for Petroleum Exporting Countries (OPEC) nations have been steadily increasing their output.

OPEC has even lifted some of its supply caps on its member states, enabling them to increase production for sale on the global market. 

However, the current trend of declining demand and increasing supply could be disrupted by a renewed focus on sanctions on Russia’s oil industry from the West. 

More severe sanctions may result in disrupted global supply as China and India continue to consume significant amounts of Russian oil. If they are forced to find oil elsewhere, it may cause a momentary uptick in prices, wrote Daily Investor.

Another positive development is the rand/US dollar exchange rate, as the former was able to marginally appreciate against the latter.

This is mainly due to a drop in the dollar’s value, resulting from growing concern over the fiscal health of the United States amidst the Trump administration’s actions.