South Africa may finally experience a drop in petrol prices this July, even with the government bringing an end to its fuel price relief efforts.
Early data from the Central Energy Fund indicates that both petrol and diesel will experience an over-recovery next month.
Petrol is looking at an over-recovery of between 268c and 271c per litre in July, while diesel is starting off with an over-recovery of between 573c and 584c per litre.
These reductions are more than enough to offset the return of the full General Fuel Levy (GFL), which was cut back in April to cushion the blow dealt by the outbreak of the war in Iran.
These are the CEF’s fuel price adjustment predictions for the first week of June:
- Petrol 93 – decrease of R2.68 per litre
- Petrol 95 – decrease of R2.71 per litre
- Diesel 0.05% (wholesale) – decrease of R5.73 per litre
- Diesel 0.005% (wholesale) – decrease of R5.84 per litre
These estimates are reflective of the global oil market, which improved throughout May.
Petrol and diesel recoveries both ended on a positive note last month as the United States and Iran moved towards a permanent truce.
However, diesel was the only one to see a price reduction this June, as half of the GFL was added back to the cost of both fuels.
The diesel cut was large enough to offset a R1.93 fuel tax reintroduction, but petrol saw a much lower improvement in its basic fuel price, meaning the tax pushed its price over into the red in June.
Fuel taxes won’t stop motorists from saving money this time around
The other half of the GFL will be re-added this July, officially ending the government’s fuel price relief measures.
Despite this, petrol and diesel are set for a price cut thanks to a more stable oil price and an improved rand/US dollar exchange rate.
The price of Brent Crude oil consistently maintained a price below $100 per barrel in May, leading to a better forecast.
However, uncertainty remains as peace talks have run into issues regarding a ceasefire between Israel and Lebanon.
Meanwhile, the rand is holding its value against the dollar, fluctuating between R16 and R16.50 per USD.
While this is higher than it was at the start of the year, it is an improvement from when the currency jumped to over R17 per USD when the war first began.
The following table shows how fuel prices will be affected in July once the General Fuel Levy is factored in:
| June predictions | Recoveries at end of 1st week of June | Fuel tax added back in June | Final projected change |
|---|---|---|---|
| Petrol 93 | – R2.68 | + R1.50 | – R1.18 |
| Petrol 95 | – R2.71 | + R1.50 | – R1.21 |
| Diesel 0.05% | – R5.73 | + R1.96 | – R3.77 |
| Diesel 0.005% | – R5.84 | + R1.96 | – R3.88 |
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