Expected Fuel Price Decrease in South Africa

Date: 18/05/2023 | Posted in Lifestyle | News | South Africa

Petrol Prices for February South Africa South African motorists can anticipate a decrease in fuel prices next month due to a drop in the price of international oil. Mid-month data from the Central Energy Fund reveals an over-recovery in petrol prices, which is likely to result in a decrease of between R1.11 and R1.13 per litre. Diesel drivers may also benefit from a fuel price cut, with data suggesting an over-recovery of between R1.27 and R1.36 per litre.

The expected changes in fuel prices are as follows:

Petrol 93: decrease of 113 cents per litre
Petrol 95: decrease of 111 cents per litre
Diesel 0.05%: decrease of 136 cents per litre
Diesel 0.005%: decrease of 127 cents per litre
Illuminating paraffin: decrease of 79 cents per litre

However, it’s important to note that the Department of Energy (DOE) states that its daily snapshots are not predictive and do not account for potential modifications such as slate levy adjustments or retail margin changes. The DOE determines these adjustments, considering various factors, at the end of the month.
The cost of fuel in South Africa is primarily influenced by the rand/dollar exchange rate and international oil prices. Adjustments to the fuel price occur on the first Wednesday of each month based on these factors.

South African motorists can anticipate a decrease in fuel prices next month due to a drop in the price of international oil.

It is worth mentioning that taxes and levies constitute 31% of the total fuel price in the country. The General Fuel Levy and Road Accident Fund Levy are the largest components of these taxes. While the General Fuel Levy can be used by the government as they see fit, the Road Accident Fund Levy is specifically allocated to road accident claims.

The value of the South African rand has experienced a decline lately, exacerbated by allegations that South Africa supplied arms to Russia, as stated by the US ambassador. On May 12, the currency reached its weakest point on record at R19.47 to the US dollar, although it has seen a slight recovery since then.

JPMorgan revised its economic growth forecasts, projecting a -0.2% GDP for South Africa in 2023. Factors such as ongoing rolling blackouts and negative international investor sentiment have contributed to this outlook. The Bureau for Economic Research (BER) highlights load shedding as a consistent drag on the currency, with concerns arising about potential higher stages of load shedding during the winter.

While global factors do not play a significant role in the rand’s weakness, economists at the BER note that the rand depreciates much faster compared to other emerging currencies.

The main reason for the expected decrease in fuel prices in June is the decline in international oil prices. Brent crude currently stands at $75.24 a barrel, having fallen below the $100 mark earlier this year due to the energy crisis and the conflict between Russia and Ukraine. Oil prices have been decreasing since the beginning of April, reflecting concerns about fuel demand in the US and China.

Conflicting narratives surround global demand and supply throughout 2023. Analysts suggest that the recent decline in crude oil prices can be attributed to concerns over the US Federal Reserve’s tightening measures and the possibility of a US recession. These concerns outweighed the positive impact of OPEC+ implementing an unexpected output cut and the US plan to replenish strategic reserves.

In May, the US began soliciting bids to refill its depleted Strategic Petroleum Reserve, aiming to purchase up to 3 million barrels of crude oil. This move would tighten the market, and oil traders have been closely monitoring the possibility of government reserve refilling.

The expected fuel prices for June in South Africa are as follows:

Inland: