Following substantial fuel price hikes that hit the country in September, South Africans can expect another big increase in petrol and diesel costs come October.
Mid-month fuel price data from the Central Energy Fund (CEF) indicates that petrol prices are set to go up by a maximum of R1.22 per litre on the first Wednesday of next month, with diesel prices looking to take an even more substantial jump of up to R2.03 per litre.
These hikes are a result of ever-increasing international oil prices following a voluntary output cut of around 1.4 million barrels per day by the oil-producing (OPEC+) cartel that started in June and is expected to continue into 2024.
The rise in the cost of the black gold has had an adverse effect on local fuel prices, adding between 90-97 cents per litre to the price structures of petrol and R1.65-1.76 per litre to diesel thus far this month.
Additionally, the continued weakness in the local currency against the US greenback during the first two weeks of September doesn’t bode well for October’s fuel price predictions.
Moving from an average of around R18.70/dollar at the end of August to now sitting at R18.86/dollar, the rand’s poor performance has tacked on another 24-28 cents per litre to next month’s fuel price structures, depending on the type and grade.
With these inputs taken into account, fuel prices in South Africa in October are expected to be adjusted as follows, according to the CEF:
- Petrol 93 – Increase of R1.15 a litre
- Petrol 95 – Increase of R1.22 a litre
- Diesel 0.05% – Increase of R2.03 a litre
- Diesel 0.005% – Increase of R1.93 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.
Why diesel prices are suddenly surging
Traditionally, diesel is the more affordable fuel and enjoys smaller price hikes than petrol, though over the past few months, it has bucked this trend.
Diesel occupies a smaller portion of the global fuel market and is therefore more sensitive to fluctuations in oil supply and pricing, and it is also one of the primary sources for home heating and powering factories in the European region.
Following global sanctions on Russian-made oil after its invasion of Ukraine, many countries around the globe decided to sell off the bulk of their fuel reserves in an effort to stabilise prices on an international scale.
With continued sanctions on Russia, coupled with the Eurozone approaching winter months and low inventories around the world including in the United States, diesel is more in demand than a few months ago while supply is more hamstrung than usual, Reuters reports.
The simple principle of higher demand and lower supply has significantly driven up the price of this fuel type, narrowing the gap between it and its more refined counterpart.
If the current market conditions persist for the rest of the month, diesel will once again peak past R24 per litre in South Africa in October, while petrol will be playing with the R25-per-litre mark.
Join the discussion