South Africa may have enough fiscal room to extend fuel price relief measures as global oil volatility continues to place pressure on consumers and the broader economy.
According to Citigroup, the government could feasibly prolong its current fuel tax relief by up to two months. The bank’s country economist, Gina Schoeman, indicated that such an extension would likely cost between R10 billion and R12 billion. However, she noted that this remains manageable due to prudent government spending, expected mining tax windfalls, and the availability of contingency reserves.
The intervention follows a sharp surge in global oil prices, driven by geopolitical tensions linked to the Iran war 2026 and disruptions around the Strait of Hormuz. Since the conflict began on 28 February 2026, oil prices have climbed by nearly a third, placing significant upward pressure on domestic fuel costs.
In response, Finance Minister Enoch Godongwana implemented a R3 per litre cut to the General Fuel Levy (GFL) for both petrol and diesel in April. The National Treasury confirmed that this measure would result in a revenue shortfall of around R6 billion, which would be absorbed within the existing 2026 fiscal framework.
Beyond the immediate tax relief, government is also exploring a broader support package aimed at cushioning households from rising living costs. Inflationary pressures are already beginning to build, with consumer inflation recorded at 3% in February—within the target range of the South African Reserve Bank—but projected to peak at approximately 4.3% in April.
Fuel price data further highlights the strain. Current under-recoveries stand at as much as R2.80 per litre for petrol and a steep R8.53 per litre for diesel, pointing to the likelihood of further increases. Early indicators suggest that motorists could face hikes of up to R3 per litre for petrol and R9 per litre for diesel in May if no additional interventions are introduced.
Deputy Director General at the Department of Mineral and Petroleum Resources, Tseliso Maqubela, confirmed that discussions around further relief are ongoing. While no final decision has been made, he indicated that an announcement could be expected around the third week of April.
Maqubela also emphasised the structural factors behind South Africa’s fuel pricing model. Prices are largely determined by international refined fuel costs at major global hubs, as well as the rand-dollar exchange rate. On top of this, domestic prices incorporate government levies, including the Road Accident Fund, as well as import, transport, wholesale and retail margins.
Despite criticism, Maqubela maintained that the pricing framework has remained effective for nearly two decades, ensuring both supply stability and competitive pricing. However, South Africa’s heavy reliance on imported refined fuel—accounting for between 60% and 70% of supply—continues to expose the country to global market shocks. These imports are primarily sourced from Gulf nations such as Oman, Kuwait, the UAE and Saudi Arabia.
While concerns have been raised about potential supply disruptions, Maqubela downplayed these risks, stating that availability is not currently under threat. Instead, the primary challenge remains the escalating cost of fuel.
Labour federation Congress of South African Trade Unions has warned that the current trajectory poses a serious risk to an already fragile economy, which is growing at just 1%. The union welcomed the initial levy cut but stressed that more substantial and sustained intervention is required.
Cosatu has called on government to deepen fuel tax reductions, arguing that this would provide the most immediate and effective relief to households and businesses. It cautioned that without further action, continued fuel price increases could have severe consequences for workers, economic stability and inflation.
As global uncertainty persists, the government faces mounting pressure to strike a balance between fiscal discipline and the urgent need to shield South Africans from the ripple effects of rising fuel costs.
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