Petrol price cuts expected for South Africa in June

South Africans can look forward to a potential drop in the cost of both petrol and diesel come June.

Mid-month data published by the Central Energy Fund (CEF) shows that due to favourable market conditions, petrol prices could be slashed by a minimum of 61c per litre on the first Wednesday of next month, and diesel prices by an even more welcome 74c per litre.

These potential adjustments come against the backdrop of a reduction in international petroleum product prices and a strengthening rand/US dollar exchange rate.

The price of Brent Crude oil dropped from $89.50/barrel on 26 April to $83.36/barrel by 13 May, contributing to an over-recovery in domestic fuel prices of between 40-41c/litre for petrol and 53-56c/litre for diesel.

Compounding these savings, the rand appreciated from approximately R18.99/dollar to R18.39/dollar over this same period, cutting a further 21-22c/litre from the expected prices of fuel, depending on the grade.

Accounting for these inputs, fuel prices in South Africa in June are anticipated to be adjusted as follows:

• Petrol 93 – Decrease of 63c a litre
• Petrol 95 – Decrease of 61c a litre
• Diesel 0.05% – Decrease of 74c a litre
• Diesel 0.005% – Decrease of 77c 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.

Light at the end of the tunnel

Fuel prices may start trending further downwards during the rest of 2024 with oil prices expected to continue falling over the next four months.

Citibank predicts that Brent Crude oil could rise slightly to $86/barrel in June but drop to a low of $74/barrel in the third quarter of 2024, which will significantly affect the prices we see at the pumps.

Oil rates are currently at a three-month low off the back of a smaller-than-expected drop in US crude oil inventories in the second week of May and a 200,000-barrel-per-day increase in production in the United Arab Emirates, writes oilprice.com.

The present outlook is that these market factors will continue to drive down the cost of the black gold in the short term as fears of a large-scale war in the Middle East have subsided.