Mid-month data published by the Central Energy Fund (CEF) indicates that fuel prices are set for a mixed bag in August.
Current projections show that petrol rates could drop by as much as 10c per litre, whereas diesel could increase by up to 18c per litre.
These expected adjustments are a result of rising international petroleum product prices between 28 June and 12 July 2024, coupled with a volatile rand/US dollar exchange rate.
The average price of Brent Crude oil rose from $86.41/barrel on 28 June to $87.43/barrel by 4 July, then fell to $84.66/barrel by 9 July, climbed to $85.40/barrel by the 11th, and ended the period at $85.03/barrel on the 12th.
This led to higher average international petroleum product costs during the first few weeks of July, which saw an under-recovery of between 9-12c/litre for petrol and 18-33c/litre for diesel.
Meanwhile, the daily rand/US dollar exchange rate fluctuated noticeably during the period under review.
It sat at approximately R18.20/dollar on 28 June, dropping to a low of R18.01/dollar by 1 July, rising to R18.48/dollar by 3 July, and settling back down to R17.97/dollar by 12 July.
The movements contributed to an over-recovery in domestic fuel prices of between 17-18c/litre, depending on the fuel type.
Based on these inputs, fuel prices in South Africa next month are expected to be adjusted as follows, as per the CEF:
- Petrol 93 – Decrease of 5c a litre
- Petrol 95 – Decrease of 8c a litre
- Diesel 0.05% – Increase of 1c a litre
- Diesel 0.005% – Increase of 16c a litre
It must be noted that these predictions are not the official changes that will be made by the Department of Energy in August, which may be higher or lower as they also take into account any potential changes in the Slate Levy, taxes, transport costs, or wholesale and retail margins.
The tide is turning
Experts suggest that the relief motorists experienced over the last few months in terms of lower fuel prices may soon come to an end.
The price of Brent Crude oil has continued to climb on signs of stronger demand on a global scale and indications that the US Federal Reserve is nearing its decision to start cutting interest rates.
Similarly, prices are being driven upwards off the back of a drop in Russian exports and reduced supply by the oil-producing nations (OPEC+), according to Bloomberg.
On the bright side, oil rates are still below the high of $94/barrel they reached in April and continue to be range-bound between $83 and $90/barrel, which is expected to continue for the rest of the year if current market conditions persist.
Likewise, the rand is expected to maintain its strength against the US dollar following the formation of the so-called Government of National Unity, said Nedbank.
As such, a firmer rand will likely contain the impact of elevated global oil prices on domestic fuel prices during the remainder of the year.
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