Say goodbye to South Africa’s petrol price cut

The sizeable petrol and diesel price cuts anticipated for August have been wiped out by the renewed conflict in the Middle East.

At the start of July, the Central Energy Fund (CEF) indicated that motorists would see a R2.50 reduction in the price of petrol, while diesel was set for an even larger cut of R3.51 per litre.

However, this was before the United States and Iran resumed their attacks, with the two sides launching missile strikes at commercial vessels and strategic targets across the Middle East, ending the ceasefire agreement.

Consequently, oil prices have skyrocketed from a low point of $68 per barrel at the start of July up to $90 per barrel as of the time of writing.

This is reflected in the CEF’s latest fuel price data, which shows that South Africa’s strong fuel price recoveries have taken a turn for the worse.

Petrol is now looking at a minuscule cut of around 40c per litre next month and is still on a downwards trajectory, meaning it will likely turn into a price increase by the time the official price adjustments are made.

Diesel, meanwhile, is now set for a hike of roughly R1.10 per litre, reflecting a R4.61 reversal in the fuel’s price trajectory.

These are the CEF’s fuel price adjustment predictions at the end of the fourth week of July:

• Petrol 93 – decrease of R0.46 per litre
• Petrol 95 – decrease of R0.41 per litre
• Diesel 0.05% (wholesale) – increase of R1.10 per litre
• Diesel 0.005% (wholesale) – increase of R0.89 per litre

Right now, petrol is still R6 per litre more expensive than it was before the Iran war broke out, which the 46c per litre cut will do little to ease.

Diesel is now set to increase next month, undermining the significant recovery seen in the time since the US and Iran agreed to a ceasefire earlier this year.

The conflict has closed the Strait of Hormuz again, causing the price of Brent Crude oil to soar to $90 per barrel.

While this is a far cry from the $120 per barrel peak seen at the height of the conflict, it has caused the market outlook in many countries to become more pessimistic.

US President Donald Trump has threatened to extend US strikes on Iran as negotiations between the two nations have collapsed.

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