The Department of Mineral Resources and Energy (DMRE) has announced the official fuel price adjustments for South Africa taking effect this Wednesday, 4 September.
Thanks to an improvement in global oil prices and the average rand/US dollar exchange rate, petrol prices are dropping by 92c per litre across the board, while diesel prices are falling by as much as R1.05 per litre.
During the month of August, the average international product prices for petrol and diesel decreased significantly, contributing to an over-recovery of 86c per litre for petrol and between 68c and 94c per litre for diesel.
Simultaneously, the rand appreciated against the US dollar during the period under review.
The average rand/US dollar exchange rate for 2 August to 29 August 2024 was R18.0578/dollar, compared to R18.2360/dollar during the previous month.
This led to a lower contribution to the basic fuel prices of petrol and diesel by 10.92c per litre and 11.15c per litre, respectively.
Working against these improvements in market conditions, the Minister of Mineral Resources and Energy approved a retail margin increase of 5.3c per litre to be effected in the retail price structures of all octane grades of petrol with effect from 4 September 2024.
This increase is necessary to accommodate the wage increases of pump attendants, cashiers, and administrative staff at service stations.
In line with the provisions of the self-adjusting Slate Levy mechanism, the Slate Levy on petrol and diesel will remain at 0.00c per litre for September.
With these major input elements accounted for, the following fuel price changes will take effect in South Africa on Wednesday:
- Petrol 93 – Decrease of 92c a litre
- Petrol 95 – Decrease of 92c a litre
- Diesel 0.05% – Decrease of 79c a litre
- Diesel 0.005% – Decrease of R1.05 a litre
The table below indicates how the official fuel price adjustments for September will reflect at the pump:
| Fuel type | Gauteng | Coastal |
|---|---|---|
| Petrol 93 | R21.79 | R21.00 |
| Petrol 95 | R22.19 | R21.40 |
| Diesel 0.05% | R19.59 | R18.80 |
| Diesel 0.005% | R19.69 | R18.93 |
More relief to come
South African motorists can look forward to a continuation of the current downtrend in fuel prices during the remainder of 2024, as per FNB Senior Economist Koketso Mano.
Mano recently highlighted that weaker-than-expected economic indicators out of the United States, subdued oil demand from China, and slowing global inflation are all pointing towards falling international oil prices, which will contribute to a lower basic fuel price in the domestic market.
“Softer economic data from the US also suggests that a Federal Reserve interest rate cut is looming, and the consensus call is that the first cut will be delivered in September. There is also the possibility that the quantum of cuts this year could be larger,” said Mano.
This should attract investors away from the US dollar and towards riskier assets such as the rand.
Therefore, FNB anticipates a recovery in the rand to a fair value of around R17.50 towards Q4 2024, which would support lower fuel prices and slower inflation.
“We currently project a continued downward trend, with petrol prices potentially falling below R20 per litre in the early part of 2025,” said Mano.
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