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Wednesday / 22 May 2024
HomeFeaturesWhat to expect from petrol prices in South Africa in 2024

What to expect from petrol prices in South Africa in 2024

South African motorists can look forward to a lighter burden on their wallets for the first few months of 2024, but after this, they should brace fuel rates that are more on par with the high prices that have dominated headlines this year.

This is according to the research and consultancy group PwC, whose data projects that South Africa’s fuel prices will continue declining from where they are now through the first quarter of 2024, but that overall costs will likely hover around the elevated threshold that has become the new norm in 2023.

Short-term relief but long-term pain

As of December 2023, petrol 95 is currently trading at R23.25 per litre at inland rates, while diesel 0.005% is sitting at R21.99 per litre.

This is a drop of 65 cents per litre for petrol and R2.41 per litre for diesel from November, and averaged out over the last three months, petrol has been going for roughly R24.13 per litre while diesel has traded at R23.72 per litre.

Based on PwC’s projections, petrol should hopefully drop to a mean of R23.02 per litre for the first three months of 2024, while diesel should be reduced to R21.21 per litre, bringing some much-needed relief for the average consumer in the new year.

These forecasts are determined using data for the projected future monthly price for Brent crude oil as well as the US dollar exchange rate, where the former is anticipated to decline while the latter is expected to rise slightly.

The rand’s value in particular is expected to continue its slow depreciation against the dollar in line with a now long-term historical precedent that has been established, as the exchange rate is on track to depreciate from its current rate of R18.30/$ to around R18.95/$ by the end of next year, writes BusinessTech.

As for oil prices, the current estimations from the US Energy Information Administration (EIA) suggest that OPEC+ nations will drop their production by 340,000 barrels per day to 37.8 million barrels per day in the coming year, which should put a floor beneath the global market price for the black gold.

The combination of these factors means that petrol is currently projected to cost 0.6% more over the course of the next 12 months, while diesel is actually expected to decrease by the same amount.

While these are not significant numbers either way, it comes as relatively good news considering that South Africa’s inflation rate is forecast for 5.2% in 2024, said PwC.

In any case, petrol is showing that it is still on a slow upward trend despite the recent price cuts, owing to the rand’s decreasing value outweighing the predicted decline in future oil prices.

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