Petrol prices are expected to continue their upward ascent in South Africa this May by around 30c per litre, while diesel prices are looking to drop by a minimum of 26c per litre, according to mid-month fuel-price data released by the Central Energy Fund (CEF).
These anticipated adjustments are by and large a result of a rise in international oil prices which climbed from approximately $86.09/barrel on 27 March to $90.45/barrel by 12 April.
This movement led to an under-recovery in local petrol prices of 36-38c per litre, while simultaneously producing an over-recovery in diesel prices of 20-24c per litre.
On the brighter side, a positive movement in the rand/US dollar exchange rate during the first few weeks of April has reduced the impact of the rising costs of black gold.
The average exchange rate used in calculating the basic fuel price dropped from around R18.93/dollar on 27 March to R18.75/dollar on 12 April, subsequently leading to an over-recovery in all domestic fuel prices of between 6-7c per litre, depending on the grade.
Accounting for these inputs, fuel prices in South Africa in May are expected to be adjusted as follows, according to the CEF:
- Petrol 93 – Increase of 30c a litre
- Petrol 95 – Increase of 31c a litre
- Diesel 0.05% – Decrease of 26c a litre
- Diesel 0.005% – Decrease of 31c a litre
It must be noted that these predictions are not the official changes that will be made by the Department of Energy next month, 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.
Fuel price warning
Industry experts have warned that fuel prices around the globe may be in for a shock over the coming weeks due to the escalation of conflict in the Middle East, Daily Investor reports.
This weekend, Iran launched an attack on Israel following the latter’s bombing of the Iranian embassy in Damascus on 1 April.
Due to the region being one of the world’s top oil producers, the expanding conflict has the potential to severely hamstring the availability of Brent Crude oil in other countries.
Other supply constraints have also been highlighted in recent months.
Ukrainian drones are actively striking critical energy infrastructure deep within Russia, in turn forcing the country to curtail its oil output.
In the United States, oil production has been on a consistent decline since reaching peak levels in 2023 due to freezing temperatures sweeping over large parts of the country at the start of 2024.
Similarly, the Organisation of Petroleum Exporting Countries (OPEC) is maintaining production cuts to the end of the second quarter of this year and has imposed stricter enforcement of these limits for its members.
As the Northern Hemisphere enters summer months, it is expected that demand for fuel will also increase as more people start travelling and enjoying the outdoors, putting more stress on the supply chain.
These elements may see oil rates go as high as $100 per barrel, which will subsequently push up the prices we see at the pumps by a considerable margin.
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