South African Fuel Prices Update
Fuel Price Update for July: What South African Motorists Can Expect
As South African motorists gear up for July, there’s a silver lining on the horizon with significant reductions in fuel prices expected. With global oil prices dipping and some relief on the economic front, the upcoming adjustments promise to ease the financial burden on drivers across the nation. Here’s what you need to know about the anticipated price cuts and the factors driving these changes.
Exchange Rates and Their Impact
The exchange rate has played a significant role in determining the basic fuel price in South Africa. Recent data indicates a fluctuating trend, as shown in the graphs, with the average exchange rate for the period from 26 April to 13 June 2024 moving from around R19.10 to R18.25 against the US dollar. The daily exchange rate has experienced similar volatility, impacting the calculation of fuel prices.
Analysis of Average Over/(Under) Recovery
The movement in international product prices and exchange rates has led to various recoveries in fuel prices:
- Petrol 95: 128.342 cents/litre (recovery) with a movement in exchange rate contributing -16.393 cents/litre.
- Petrol 93: 133.518 cents/litre (recovery) with a movement in exchange rate contributing -15.864 cents/litre.
- Diesel 0.05%: 71.137 cents/litre (recovery) with a movement in exchange rate contributing -16.447 cents/litre.
- Diesel 0.005%: 65.342 cents/litre (recovery) with a movement in exchange rate contributing -16.733 cents/litre.
- Illuminating Paraffin: 61.204 cents/litre (recovery) with a movement in exchange rate contributing -16.597 cents/litre.
International Oil Prices
The international product prices for a basket used in basic fuel price calculations have shown a downward trend from late April to mid-June 2024. Petrol ULP 95 and Diesel 0.05% S prices have both decreased, with significant drops noted at the end of May, before stabilizing in early June. This decline in global oil prices has positively influenced the expected reductions in local fuel prices.
Expected Fuel Price Changes for July
According to data from the Central Energy Fund (CEF), South African motorists can expect notable cuts in fuel prices for July, driven primarily by the favorable global oil prices. However, the rand’s volatility has contributed to a lesser extent.
The expected changes are as follows:
- Petrol 93: decrease of R1.18 per litre
- Petrol 95: decrease of R1.12 per litre
- Diesel 0.05% (wholesale): decrease of 55 cents per litre
- Diesel 0.005% (wholesale): decrease of 49 cents per litre
- Illuminating Paraffin: decrease of 45 cents per litre
Inland and Coastal Price Projections
The mid-month prices reflect the following changes at the pumps:
- Inland:
- Petrol 93: R23.34 (down from R24.52)
- Petrol 95: R23.76 (down from R24.88)
- Diesel 0.05% (wholesale): R20.86 (down from R21.41)
- Diesel 0.005% (wholesale): R20.98 (down from R21.47)
- Illuminating Paraffin: R14.86 (down from R15.31)
- Coastal:
- Petrol 93: R22.55 (down from R23.73)
- Petrol 95: R22.97 (down from R24.09)
- Diesel 0.05% (wholesale): R20.07 (down from R20.62)
- Diesel 0.005% (wholesale): R20.22 (down from R20.71)
- Illuminating Paraffin: R13.86 (down from R14.31)
Market Reactions and Economic Factors
The rand has experienced instability following the 2024 national election results, with markets initially reacting negatively to the uncertainty of the ANC’s performance and the subsequent formation of a Government of National Unity (GNU). While the rand has strengthened slightly since the election, it remains volatile, contributing to the under-recovery in fuel prices.
Global oil prices, on the other hand, have been more favorable, with prices dropping below $85 a barrel, currently at $82. This decline is attributed to a risk-off tone in financial markets and robust global supply, despite geopolitical tensions and disruptions in trade flows.
Conclusion
Motorists can look forward to a significant decrease in fuel prices for July, driven by lower global oil prices. However, the volatile rand continues to play a crucial role in the overall pricing structure. The Department of Mineral Resources and Energy will finalize these adjustments at the end of the month, considering various factors including international oil prices and the exchange rate.
Note: The Department of Mineral Resources and Energy (DMRE) emphasizes that the daily snapshot data provided are not predictive and do not encompass potential adjustments such as slate levy adjustments or retail margin changes.
Source: Bussinestech
Related Content
