R29 per litre petrol price warning

Motorists should brace for another fuel price hike this October, which is likely to push petrol past R29 per litre.

This is according to new data from the Central Energy Fund (CEF) for the end of the second week of September, which shows that petrol and diesel prices are still on track for a substantial under-recovery.

Petrol is now expected to go up by between R2.01 and R2.14 per litre, while diesel will receive a similar increase of between R1.71 and R2.04 per litre.

These hikes are predicated on an under-recovery in the international product price of both fuels due to the ongoing war in the Middle East.

The petrol estimate has continued to rise, with the CEF previously reporting that a R1.81 hike was on the cards.

Unfortunately, this suggests that prices are likely to increase even further throughout the month.

These are the CEF’s latest fuel price adjustment predictions as of the second week of September:

• Petrol 93 – increase of R2.01 per litre
• Petrol 95 – increase of R2.14 per litre
• Diesel 0.05% (wholesale) – increase of R1.71 per litre
• Diesel 0.005% (wholesale) – increase of R2.04 per litre

Note 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 October.

Oil prices have surged this week due to intensified fighting in the Middle East, with Saudi-backed forces clashing with Yemen-backed Houthi militants in the region.

The fighting has sparked concerns of an even greater disruption to oil supplies as the Houthis advanced towards coastal areas surrounding the Bab al-Mandeb Strait, reported Bloomberg.

Brent Crude oil prices have climbed from $85 per barrel in late August to $107 per barrel as of mid-September.

Houthi forces have attacked Saudi energy facilities, and the US has launched strikes against Iranian oil tankers. The UK Maritime Trade Operations reported that two ships were struck off the coast of Oman on 10 September.

Additionally, China has increased its crude oil purchases, putting even more pressure on global supplies.

One positive development is the rand/US dollar exchange rate. The rand strengthened on Friday ahead of a US inflation report, trading at R16.17 per USD.

The relatively strong position means the exchange rate is contributing a 15c-per-litre over-recovery in fuel prices, though this is far from enough to prevent a massive hike next month.

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

Petrol 93 price 28 August – 10 September

Petrol 95 price 28 August – 10 September

Diesel 0.05% price 28 August – 10 September

Diesel 0.005% price 28 August – 10 September