Mid-month data published by the Central Energy Fund (CEF) indicates that fuel prices in South Africa are likely to make small movements in July in mixed directions.
The current picture shows that we can expect a decline in petrol prices of up to 13 cents per litre, while diesel prices could rise by around 7 cents per litre.
The CEF stresses that these are not the official adjustments that will come into play on the first Wednesday of next month, only an estimation of where prices could go based on market conditions that played out after the last changes were made.
According to the organisation, fuel prices in South Africa are expected to be adjusted as follows comes July:
- Petrol 93 – Decrease of 13 cents a litre
- Petrol 95 – Decrease of 4 cents a litre
- Diesel 0.05% – Increase of 7 cents a litre
- Diesel 0.005% – No change
These predictions only take into account fluctuations in the rand/US dollar exchange rate and international oil prices, and do not account for any potential alterations in elements such as the Slate Levy and retail margins, which will be determined by the Department of Energy at month-end.
Mid-month picture
As of mid-June, decreasing international oil prices have been the biggest driver behind lower expected fuel costs in July.
Brent Crude oil prices fell to US$73.20 per barrel on 13 June, down from around US$76 per barrel at the start of the month, off the back of the US Federal Reserve hinting that it could continue hiking interest rates for the remainder of the year, reports Reuters.
This downtrend has resulted in a maximum of 16 cents per litre being shaved off the price of petrol and 3 cents from diesel.
Similarly, at the start of the period, the average rand/US dollar exchange rate which determines the Basic Fuel Price that we pay on imported propellants sat around R19.50/dollar, coming down to R19.00/dollar by mid-June.
The local tender regained this bit of ground against the greenback by virtue of shorter power cuts being implemented and reduced tensions between South Africa and the West over its friendliness with Russia, writes Nasdaq.
While an appreciating rand is welcomed, the current rate at which the currencies swap hands is still higher than it was during the month of May when it trended between R18.35/dollar and R18.95/dollar.
Consequently, the less ideal exchange rate has tacked around 3 cents per litre back onto the prices of all fuel types in the country.
It’s worth noting that the current picture is subject to change before July’s official alterations are made and they could be much higher, or lower than they are now, depending on how market conditions play out for the remainder of June.
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