South African motorists may face some pain at the petrol pumps in December.
This is according to data from the Central Energy Fund (CEF), which showed that petrol and diesel prices in South Africa were showing negative recovery and heralding price hikes.
Reasons for this include the higher global oil prices, which are trending upwards relative to October due to US sanction pressure on Russian oil.
Additionally, the recent strengthening of the rand is showing signs of slowing, which is reducing its impact on prices.
As a result of these factors, motorists are expected to face an estimated increase of 14-19 cents per litre for petrol and 68-82 cents per litre for diesel next month.
Below are the predicted mid-month fuel price adjustments for December:
- Petrol 93: increase of 14 cents per litre
- Petrol 95: increase of 19 cents per litre
- Diesel 0.05% (wholesale): increase of 68 cents per litre
- Diesel 0.005% (wholesale): increase of 82 cents per litre
- Illuminating paraffin: increase of 73 cents per litre
It is worth noting that these projections are subject to change by the end of the month.
However, these predictions are usually fairly accurate and give a good indication of where the fuel prices are heading.
The Department of Petroleum and Mineral Resources only announces the final price a few days before the implementation date.
Strong rand and oil prices
Despite global events, the rand has proven remarkably resilient in recent months, reaching a three-year high against the dollar at R17 to the foreign currency.
A medium-term budget review this week was also optimistic about its position, and while it has pulled back to R17.10 to the dollar as of Friday, it is still trading at resilient levels compared to last month.
However, this trend would need to be sustained for a significantly longer period to have a substantial impact on fuel prices.
Currently, the rand’s performance is contributing to a small over-recovery in fuel pricing of around 1 cent per litre.
The resilience of the rand is then balanced by rising oil prices, which have been trading higher on average this month relative to October.
This currently sits at $64 a barrel, noticeably higher than the sub-$60 prices during the first half of October.
The price rise is chiefly thanks to the Trump administration and the US raising pressure on Russia to end the war in Ukraine, through threats such as sanctions on Russian Oil.
With only days until the sanctions are implemented, the markets have become somewhat bearish on supply.
However, with OPEC increasing production levels, the prevailing view remains that a glut or oversupply of oil will persist into 2026.
Analysts warn that the sanctions against Russia still pose a substantial threat to the oil supply, even with the current oversupply, which is now reflected in oil prices.
In terms of what this means for South Africa, since the country imports oil and petroleum products, this situation means lower recoveries and higher fuel prices.
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