Fuel price set to rocket in August: Here’s what you might pay at the pumps from next week

Despite a stronger rand, the rise in global oil prices has set petrol and diesel prices on an alarming upward trajectory for the month of August.

The Automobile Association (AA) warned the latest projected hike in the fuel price might even be higher if the under-recovery persists until the end of this week when prices are finalised by the Department of Energy (DOE).

“Currently the trajectory indicates that all fuel will be more expensive in August, with the quantum of the increases most probably being higher than the current data indicates,” according to the AA.

August fuel price: Expected changes for petrol and diesel

According to the Central Energy Fund’s (CEF) latest daily snapshot, motorists could look at a price hike of between 20 to 25 cents per litre for petrol and almost 60 cents per litre for diesel.

This in comparison to the CEF’s mid-month data, which projected increases of seven cents a litre in the price of 95 unleaded and a 48 cents rise in the price of diesel.

The one cent per litre downturn in the price of 93 unleaded, has also evaporated into thin air.

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Crucial fuel price factors: Rand/dollar, oil prices

The fuel prices are usually adjusted on the first Wednesday of a month and primarily determined by the price of oil and the rand/dollar exchange rate.

The expected hike in the petrol and diesel prices come despite a stronger rand, which has contributed to an over-recovery of 19 cents per litre for all grades.

However, this positive move for prices is not enough to counteract the effect of rising global oil prices, which are contributing to a 37 cents to 77 cents per litre under-recovery in prices.

While the rand has remained relatively flat against the dollar, the global oil price has strengthened in recent weeks.

After falling to below $78 a barrel in the first week of January, it’s now above $82 as traders expect that demand from China will strengthen as its economy reopens.

At the time of writing, on 26 July, the international price of Brent Crude oil was listed at $82 while the rand was trading at R18 to the US dollar.

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DOE has the last say on fuel price

The DOE has previously stressed that the daily CEF snapshots are not predictive and do not cover other potential changes like slate levy adjustments or retail margin changes which could come into play when the fuel price is determined.

The official fuel price adjustments will come into effect on 2 August 2023.

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