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Wednesday / 19 June 2024
HomeNewsWhat to expect from petrol prices in South Africa this Wednesday

What to expect from petrol prices in South Africa this Wednesday

Month-end data provided by the Central Energy Fund (CEF) points to a mixed outlook for fuel price adjustments in May.

Petrol rates could rise by as much as 37c/litre this Wednesday, 1 May, while diesel prices are looking to drop by a minimum of 30c/litre.

These expected changes are largely a consequence of heavily fluctuating oil prices during the month of April.

On 1 April, Brent Crude oil traded around $87.42/barrel, reaching a high of $91.17/barrel by the 5th and dropping back down to $89.01/barrel by the 25th.

These movements resulted in an under-recovery in local petrol prices of between 33-34c/litre; and simultaneously an over-recovery in diesel prices of 33-39c/litre.

A depreciating rand/US dollar exchange rate then had a net negative effect on fuel costs across the board.

The rand traded at approximately R19.02/dollar on 1 April, sank to a low of R18.50/dollar by the 9th, shot up to R19.22/dollar by the 19th, and settled at R19.05/dollar on the 25th.

The sporadic changes tacked on another 3c/litre to all fuel prices in the country.

Accounting for these inputs, fuel prices in South Africa this Wednesday are expected to be adjusted as follows:

  • Petrol 93 – Increase of 36c a litre
  • Petrol 95 – Increase of 37c a litre
  • Diesel 0.05% – Decrease of 30c a litre
  • Diesel 0.005% – Decrease of 37c a litre

It must be noted that these predictions are not the official changes that will be made by the Department of Energy this week, 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

With the escalation of conflict in the Middle East, industry experts have warned that fuel prices could rise substantially during the remainder of 2024.

Earlier in April, Iran launched an offensive on Israel following the latter’s bombing of the Iranian consulate in Damascus.

Israel responded with a counterattack, sparking fears that the world’s largest oil-producing region will be enveloped in its biggest conflict in decades.

Should a full-blown military invasion of one of these countries materialise, it could lead to massive disruptions to oil supply and subsequent shortages of the black gold.

Lipow Oil Associates suggests that a barrel of Brent Crude oil could increase to $100/barrel if Iran’s oil fields or refineries are affected. If the Strait of Hormuz is closed, the main channel from the Persian Gulf to the open ocean, prices could go as high as $130/barrel.

Another concern is that nations such as Saudi Arabia, Iraq, and Kuwait may get involved in the Israel-Iran conflict; should this happen, the World Bank estimates that oil prices may soar to $150/barrel.

Any increase in oil costs drives up the basic fuel price of imported petrol and diesel, thus negatively impacting the prices we see at the pumps.

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