South African motorists are in line for considerable relief this April, with forecasts predicting a drop in fuel prices. Petrol could fall by over 70 cents per litre, while diesel prices may decrease by nearly R1.00.
This price reduction is driven by declining oil prices and a strong rand, which has maintained its position against the US dollar throughout 2025.
Oil prices have dropped by more than 3% over the past month, as concerns about slower global economic growth, fueled by a potential trade war, rise. Additionally, major oil producers are expected to increase supply, with many traders betting that oil prices will continue to decline.
The rand has remained resilient, appreciating by nearly 1% against the dollar in the past month.
The Central Energy Fund tracks these shifts and forecasts the changes to fuel prices in South Africa. Its latest data points to the following adjustments for April:
- Petrol 93: decrease of 74 cents per litre
- Petrol 95: decrease of 88 cents per litre
- Diesel 0.05%: decrease of 94 cents per litre
- Diesel 0.005%: decrease of 96 cents per litre
Despite some fluctuations in financial markets caused by US President Donald Trump’s trade policies, oil prices have stayed relatively stable. Last week, oil prices temporarily rebounded, rising by 2.2% to $72 per barrel, as the US government assured markets that reciprocal tariffs would be carefully targeted, not widespread.
However, these tariffs are still expected to dampen global economic growth, especially if other countries retaliate with their own trade barriers. This could lower oil demand, putting downward pressure on prices.
On the supply side, oil output is expected to rise as OPEC members relax their production cuts. Starting in April, these countries will begin increasing their output by 2.2 million barrels per day, a move initially anticipated for late 2025 or early 2026. Fears of losing market share pushed major Middle Eastern producers to accelerate this increase.
Meanwhile, the rand has been holding its ground against the dollar, despite escalating global tensions and expectations that emerging market currencies would weaken. Surprisingly, the rand has remained robust, with the US dollar weakening by over 3% against the rand so far this year.
Shannon Bold, a senior economist at the Bureau for Economic Research, attributes the rand’s strength to local economic factors. She pointed to a better-than-expected current account deficit for the fourth quarter of 2024, as well as South Africa’s monetary policy stance, which could support the rand further.
“With relatively high real interest rates, the rand remains an attractive option for yield-seeking investors,” she said.
South Africa’s risk premium has also decreased since the formation of the Government of National Unity (GNU) in June 2024. This has spurred foreign investors to re-enter the country’s bond market, attracted by the strong returns offered by South African government debt. However, these investors have yet to return to the equity markets.
