South Africans are set to enjoy reduced petrol and diesel prices in September, thanks to favourable exchange rates and oil prices allowing for an over-recovery.
The Central Energy Fund (CEF) data for the end of August’s third week shows that the petrol prices are heading for a small cut of between 6 and 14 cents per litre.
Diesel will see a larger price cut of around 52 cents per litre.
This is an excellent turnaround since the beginning of the month, where due to the negative rand-to-dollar exchange rate, the fuel prices were elevated.
Current projections indicate the following mid-month price changes for fuel:
- Petrol 93: decrease of 14 cents per litre
- Petrol 95: decrease of 6 cents per litre
- Diesel 0.05% (wholesale): decrease of 51 cents per litre
- Diesel 0.005% (wholesale): decrease of 52 cents per litre
A key reason for this reversal in fortunes is likely the drop in global oil prices, which has seen a 10% drop this year, and prices in August were lower than in July.
Market analysis by Bloomberg has indicated that prices remain steady following forecasters weighing the outlook for Russian crude flows to India after a Trump administration official ramped up his criticism over the trade ahead of an expected tariff increase.
Peter Navarro, a White House trade adviser, has expressed his concern over India continuing to purchase Russian oil, and he expects the US import levies on the nation to double as planned on 27 August.
“India doesn’t appear to want to recognise its role in the bloodshed,” he said.
“They don’t need the oil. It’s a refining profit-sharing scheme.”
Along with this, President Trump has threatened to raise duties on Indian imports to the US to 50%, half of which is due to buying Russian crude oil.
As this dispute continues, oil remains lower for the year as OPEC+ increases production and Trump’s trade policies stir concern over demand.
Consequently, the current outlook for the market remains bearish, with global demand falling and significant inventory builds expected from the next quarter.
Rand recovery
The Rand has seen surprising stability in August, showing little reactivity to local and global effects.
This is unusual, as the currency is generally regarded as being quite volatile.
Despite this, the Rand has mostly ignored the implementation of the Trump tariffs, hotter local inflation and wider geopolitical issues, trading in a tight range.
This includes only minor losses in ground this week due to a strong Dollar and reports of higher inflation from Stats SA.
According to Nedbank, investors have remained cautious ahead of the US Federal Reserve’s Jackson Hole symposium.
“The dollar strengthened across the board after the minutes from the Federal Open Market Committee’s July meeting, which suggested that the committee remains cautious,” Nedbank said.
“This fuelled expectations that the Federal Reserve might maintain higher interest rates for longer.”
This resilience had a minor beneficial impact on fuel prices, with the current rate contributing 0.3 cents to the over-recovery.
However, this is a substantial improvement from the start of the month, where it was a negative impact of about 20 cents per litre.
Loading ...
