Brace for Petrol and Diesel Price Hikes in December

Weak Rand Drives Fuel Price Changes for December

South African motorists hoping for significant fuel price relief in December may face disappointment as a weaker rand exerts upward pressure on petrol and diesel prices. Despite earlier forecasts predicting slight reductions in fuel costs, the latest data suggests only marginal changes for petrol and notable increases for diesel.

Exchange Rate and Oil Prices: Key Drivers

The Central Energy Fund (CEF), which monitors international oil prices and the rand-dollar exchange rate, forecasts the following changes to the Basic Fuel Price in December:

• Petrol 93: Decrease of 7 cents per litre
• Petrol 95: Increase of 3 cents per litre
• Diesel 0.05%: Increase of 48 cents per litre
• Diesel 0.005%: Increase of 48 cents per litre

The Department of Mineral and Petroleum Resources sets pump prices based on the average exchange rate from the preceding month. The sharp depreciation of the rand following the US election has escalated import costs, with the exchange rate climbing from R17.46 to R18.64 per US dollar by mid-November, marking its weakest point since August.

US Election Impacts on the Rand

The US election results significantly influenced the rand. Donald Trump’s presidential victory strengthened the US dollar, driven by safe-haven flows into US treasuries amidst fears of rising inflation and a weakened global economic outlook. These developments spurred a market shift, further reducing the rand’s value.

Global Oil Dynamics and Local Implications

While the price of oil has risen only modestly (1.6%) over the past month, broader trends suggest a mixed outlook. OPEC has struggled to maintain higher prices through production cuts due to increased US shale output and additional supply from South America.

Key OPEC members, including Saudi Arabia, are now debating lifting these restrictions to protect their market share and stabilize state finances. If these trends persist, oil prices may face downward pressure in 2025. However, for South Africans, this is unlikely to translate into immediate relief as the weaker rand continues to offset any potential gains from lower oil prices.

Petrol and Diesel Price Projections

Below is a breakdown of the expected changes to fuel prices for December based on the CEF’s forecast:

Long-Term Considerations

While OPEC’s upcoming December meeting could result in significant changes to production levels in 2025, the immediate impact on South Africa remains limited. Global demand for oil, influenced by challenges in China’s economic recovery and the Trump administration’s energy policies, continues to shape price dynamics.

For now, South African motorists must prepare for sustained pressure on fuel prices, with the weaker rand playing a pivotal role in determining costs at the pump.

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