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Wednesday / 17 August 2022
HomeNewsBig drop in petrol prices coming next week

Big drop in petrol prices coming next week

The Department of Mineral Resources and Energy (DMRE) has announced that South Africans can expect a “sizeable reduction” in fuel prices come August.

This is despite the tax holiday on fuels coming to an end in the first week of the month, which will see the return of the full General Fuel Levy (GFL) on domestic fuel prices.

A temporary reduction in the GFL of R1.50 per litre was introduced from 6 April to 5 July, which was later reduced to 75c per litre from 6 July to 2 August.

“Despite this reprieve coming to an end on 02 August 2022, the Department can confirm that there will still be a sizeable reduction in fuel prices including paraffin for South Africans,” said the DMRE.

“A formal announcement in this regard will be made by the end of the week.”

Oil to the rescue

The expected reduction in fuel prices comes largely off the back of a dip in international petroleum product prices, which is highly influenced by the price of Brent Crude oil.

“By close of business [Monday], 25 July 2022, the price of Brent Crude oil was hovering around 105 US dollars (R1,770) per barrel, a reduction on average of about 10% compared to the average price for June 2022,” said the DMRE.

At mid-month July, the decrease in oil prices already contributed to an over-recovery/reduction of around R2 per litre for all fuel types in the country.

Assuming the rand/US dollar exchange rate remains consistent or improves before the end of July, local fuel prices are anticipated to decrease substantially in the first week of August.

Petrol 93 price cap

In addition to the above announcement, the DMRE said that the consultation for the introduction of a price cap for 93 Octane petrol has now formally been initiated.

“This price cap will allow for the fuel suppliers who can pass the benefit to the consumer to do so,” said the DMRE.

“No disruptions are expected in the fuel market as 93 Octane accounts for a small portion of the market, however, this will allow the Department to monitor how the market will react to the capping of the price.”

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