The South African fuel landscape is poised for some changes as we approach August, according to the latest data from the Central Energy Fund (CEF). Petrol prices, specifically 95 unleaded, are projected to see a minor reduction of around 20 cents a litre on the first Wednesday of the month. This development offers a glimmer of relief to consumers after a substantial price increase of 52 cents a litre in July, primarily driven by geopolitical tensions and escalating oil prices following attacks on Iran by Israeli and US forces.
In contrast, the wholesale diesel price is experiencing a troubling trend, with indications pointing to a potential increase of 61 cents a litre after July’s already hefty rise of more than 82 cents. This raises alarm bells for many South Africans, especially as the diesel price remains approximately 70 cents a litre cheaper than it was a year ago, compounding concerns about the ongoing volatility in the fuel market.
During July, petrol prices surged significantly, largely influenced by Brent crude oil futures spiking above $87 a barrel amidst ongoing conflict in the Middle East. Fortunately, the situation appears to have stabilised, seeing prices drop back to below $70 as tensions eased and the global market reflects growing apprehensions about demand.
Additionally, a broader economic backdrop involving a US-led global tariff crisis is anticipated to dampen global economic growth, further complicating fuel pricing dynamics. While OPEC+ nations affirmed intentions to boost their oil output by more than half a million barrels daily, this may not be sufficient to offset rising diesel costs, highlighted by pronounced fears over dwindling diesel stocks in major markets such as the US and Europe.
Reports by the Wall Street Journal indicate that the distillate stockpiles, which include diesel, have hit the lowest seasonal levels since 1996 in the US, showcasing the alarming gap between supply and demand. As stocks dwindle, refining profit margins are expected to be strained, leading to higher prices further impacting consumers and businesses reliant on diesel.
In South Africa, fluctuations in local fuel prices are also influenced by the rand-dollar exchange rate, critical since oil is typically priced in US currency. Currently, the rand is trading at R17.87 against the dollar, slightly above last month’s average rate of R17.8443. This underscores the interconnected nature of global oil prices and local economic conditions affecting consumers at the fuel pump.
With almost two weeks remaining before final price adjustments are set, South Africans are advised to stay vigilant as developments unfold. Fuel prices remain a pressing issue for many, with potential implications for the broader economy as transport and logistics costs fluctuate significantly.