What to expect from petrol prices in South Africa this Wednesday

The newest data from the Central Energy Fund (CEF) shows that South Africans can expect a drop in fuel prices of over R1.00 per litre across the board this Wednesday, 2 October 2024.

This follows a sustained downtrend in international oil prices during September coupled with persistent strength in the South African rand.

R1.00 per litre relief

Brent Crude oil prices fell from $78.80/barrel at the start of September to a one-year low of $69.19/barrel on the 10th before rising back up to $73.46/barrel by the 25th, movements that were attributed to a bigger-than-expected interest rate cut in the United States in conjunction with subdued demand from China, Reuters reports.

The lower average oil costs contributed to an over-recovery in local fuel prices of between 85-92c/litre for petrol and 89-91c/litre for diesel.

During the period under review, the rand/US dollar exchange rate simultaneously dropped from an average of approximately R17.78/dollar to R17.22/dollar, seeing further over-recoveries in domestic petrol and diesel rates of between 20-21c/litre for all grades.

The rand has experienced consistent strength in recent months as investors gain confidence in the new Government of National Unity, with President Cyril Ramaphosa’s recent visits to New York and China supporting the currency’s appreciation, as per SABC News.

In addition, increased interest rate differentials between South Africa and the United States following September’s interest rate cuts increased the appeal of riskier assets such as the rand, providing further downward pressure on the exchange rate.

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

• Petrol 93 – Decrease of R1.05 a litre
• Petrol 95 – Decrease of R1.13 a litre
• Diesel 0.05% – Decrease of R1.12 a litre
• Diesel 0.005% – Decrease of R1.10 a litre

It must be noted that these predictions are not the official changes that will be made by the Department of Energy in October, 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 margin