Things are looking good for petrol prices in South Africa in December, but less so for diesel.
Mid-month data from the Central Energy Fund (CEF) indicates that the former fuel type could see a drop of as much as 16c per litre, whereas the latter could go up by a considerable 38c per litre.
A mixed bag
The variation between the propellants largely comes down to erratic movements in international oil prices during the first two weeks of November.
Brent Crude oil traded for $73.16 per barrel on 31 October, soaring to a high of $75.63 per barrel by 7 November following Republican nominee Donald Trump winning the US national elections.
However, it quickly contracted to a low of $71.83 per barrel by 11 November and was sitting at $72.28 per barrel by the 13th.
As per Investopedia, the voting in of Trump’s administration gave hope to the oil sector due to the prospect of friendlier operating conditions which was the driving force behind the surge in prices in the early parts of the month, however, potential trade tariffs in the US and an increase in supply from the OPEC cartel in the Middle East wiped out a portion of these gains.
International petrol prices dove as a result of these fluctuations, leading to an over-recovery in domestic petrol rates of between 13c and 23c per litre, depending on the grade. Meanwhile, diesel prices saw an under-recovery of 28-30c per litre.
A slight deterioration in the rand/US dollar exchange rate impacted the fuels virtually evenly.
The currencies swapped hands for an average of around R17.52 per litre on 31 October, rising to R17.66 per litre by 13 November after Trump’s victory and subsequent instatement of vocal critics of South Africa’s foreign policies.
The new president-elect of the US has also touted changes to import tariffs and large tax cuts in a bid to boost the dollar, putting further pressure on emerging currencies such as the rand.
The slight depreciation in the exchange rate tacked on a further 7-8c per litre to every fuel type in the country.
Based on these market movers, fuel prices in South Africa in December are expected to be adjusted as follows:
- Petrol 93 – Decrease of 16c a litre
- Petrol 95 – Decrease of 5c a litre
- Diesel 0.05% – Increase of 38c a litre
- Diesel 0.005% – Increase of 36c 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.
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