Bad to worse for South Africa’s petrol price

The expected petrol price hikes for September have gotten worse, with motorists facing a larger hike next month due to the volatile situation in the Middle East.

This is according to data from the Central Energy Fund (CEF) for the end of the second week of August, which shows an under-recovery for both petrol and diesel.

Petrol is now looking at a hike of between 63 and 74c per litre, up from last week’s projection of between 40c and 51c per litre.

However, the situation has somewhat improved for diesel users, as the previously reported increase of between R3.11 and R3.22 per litre has now dropped to between R2.73 and R2.89 per litre, though this is still a massive under-recovery.

These are the CEF’s fuel price adjustment predictions as the end of the second week of August:

• Petrol 93 – increase of R0.63 per litre
• Petrol 95 – increase of R0.74 per litre
• Diesel 0.05% (wholesale) – increase of R2.73 per litre
• Diesel 0.005% (wholesale) – increase of R2.89 per litre

It must be noted that these are not the official fuel price adjustments, which will only be confirmed by the Department of Mineral and Petroleum Resources in the first week of September.

This means there is still a chance for fuel prices to improve, though given the situation in the Middle East, this seems very unlikely.

Brent Crude oil prices saw a slight dip this week, dropping from roughly $89 per barrel on Wednesday to $87 per barrel at the time of writing.

However, this is still much higher than the low point of $78 per barrel experienced at the start of the month, highlighting the disruptions caused by the war in Iran.

While the US and Iran were seemingly moving towards a peaceful settlement in July, talks between the two sides have collapsed and new military strikes have been carried out throughout the region.

The Strait of Hormuz is still closed, limiting oil shipments out of the Middle East. Iran stated that the waterway will remain blocked until the US meets its demands.

A few ships are still traversing the strait at great risk, switching their transponders off in an effort to avoid attack, but the shipping lane remains closed to most traffic.

Other states, including Oman, Qatar, and Pakistan, are acting as intermediaries to bring the two parties to the negotiating table.

On a more positive note, the rand has strengthened against the US dollar, trading at a value of R16.20 per USD.

Investec Chief Economist Annabel Bishop explained that the rand’s strength is thanks to a degree of risk aversion, following the South African Reserve Bank’s decision to hold interest rates.

She warned that the war in Iran is unlikely to be resolved anytime soon, and that oil prices will continue to be an area of concern.

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