South Africa’s fuel price under-recoveries for next month may flatten out by the time the Department of Mineral and Petroleum Resources makes the official adjustments in the first week of September.
This is according to Investec Chief Economist Annabel Bishop, who noted that oil prices have dropped below $90 per barrel over the last two weeks.
Additionally, the rand has proven remarkably resilient despite the global disruptions brought on by the war in the Middle East.
The rand started this week on a stronger note, trading at roughly R16.15 against the US dollar. Bishop noted that the currency is in a better position than the R16.44 per USD average this quarter.
Brent Crude oil prices, meanwhile, reached a high of $100 per barrel in late July when the United States and Iran launched new military strikes at targets across the Middle East.
Since then, both sides have engaged in informal talks with mediating nations like Qatar and Oman to find a resolution for the Strait of Hormuz, the critical oil shipping lane that remains closed to most traffic.
Iran said that the US must meet a list of conditions to restart formal talks, including lifting sanctions and unconditionally releasing frozen Iranian assets, and paying damages to Iran for the war, before the Strait is reopened.
While the situation remains volatile, the price of oil has dropped to around $87 per barrel. This, in turn, has had an effect on South Africa’s fuel price predictions.
According to new data from the Central Energy Fund (CEF) for Tuesday, 11 August 2026, petrol is currently facing an under-recovery of between 46c and 58c per litre.
Diesel has seen a significant improvement, as the under-recoveries have dropped from around R3.11 per litre to R2.73 per litre.
“The Brent crude oil price has dropped below US90/bbl, while the petrol price hike signalled for September has dropped to 58c/litre from over R1.00/litre, aiding sentiment and could drop to zero, although markets are still worried about inflation,” explained Bishop.
On the subject of inflation, Bishop noted that a 25 basis point hike remains factored in for December for South Africa’s repo rate.
Notably, the South African Reserve Bank elected not to hike interest rates in late July, despite most economists warning that a 25 basis point increase was likely.
The rand is also helping fuel prices
While the international oil price is the primary factor influencing South Africa’s petrol and diesel price adjustments, the rand also plays an important role in determining the cost of importing petroleum products.
Bishop explained that the rand’s strength can be attributed to a degree of risk aversion stemming from global markets, as rate hikes, which were previously seen as a certainty, are becoming less likely.
“While interest rate hikes in South Africa tend to strengthen the rand with immediate effect and weaken the rand if they do not occur as expected—as happened to financial markets in July in South Africa—US rate hikes weaken the rand,” she said.
Commenting on the war, Bishop said that a peace deal is unlikely to be struck in the near future, highlighting the demands listed by Iran for peace talks with the US to continue.
“The volatility is likely to persist until a permanent ceasefire is reached in the Middle East,” she said.
“The oil shock and Middle East War are expected to reflect badly on the US president and the Republican party in the US mid-terms on 3 November this year.”
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