Bad news about petrol prices

The strong petrol and diesel price recoveries for August have declined due to the renewed tensions between the United States and Iran in the Middle East

This is according to data from the Central Energy Fund (CEF) for the second week of July, which shows that the over-recoveries for petrol and diesel have been reduced.

Petrol was previously expected to drop by R2.50 per litre, but the new adjustment points to a reduced over-recovery of R1.62 per litre.

It’s a similar story for diesel, which was previously on track for a cut of R3.51 per litre, but this has dropped to just R1.61 per litre.

The silver lining is that recoveries are still in the green, though the latest data suggests prices could deteriorate further by month’s end.

These are the CEF’s fuel price adjustment predictions for the end of the second week of July:

• Petrol 93 – decrease of R1.63 per litre
• Petrol 95 – decrease of R1.62 per litre
• Diesel 0.05% (wholesale) – decrease of R1.29 per litre
• Diesel 0.005% (wholesale) – decrease of R1.59 per litre

The strong over-recoveries reported at the start of the month were predicated on a lower global oil price, as Brent Crude approached pre-war levels close to $70 per barrel.

This lower price was brought about by the improving situation in the Middle East, as the US and Iran were moving to end hostilities in the region, leading to an optimistic market outlook.

The two sides signed a Memorandum of Understanding to end the war, and the crucial Strait of Hormuz was reopened to international shipping.

However, this progress has started to unravel, as US President Donald Trump announced this week that the negotiations were over.

The attacks have resumed, and the conflict is ongoing as of the time of writing, breaking a three-week peace treaty.

Consequently, oil prices have risen, though not by enough to warrant a substantial price hike.

The following table shows how fuel prices will be affected in August, based on the current projections: