Valentine’s Day fuel price forecast: No love at the pumps for motorists in March

It looks like motorists will have to brace themselves for yet another steep increase in fuel prices as the dreaded combination of rising global oil prices and a weaker rand are contributing to an under-recovery in the price of petrol and diesel.

According to the Central Energy Fund’s (CEF) data, petrol prices are showing a potential increase of around R1.35 per litre lined up for March 2024, while diesel prices are set to go up between R1.40 to R1.60 per litre.

Should the above predictions prevail on the first Wednesday of the month of March, motorists could be paying R23.87/litre for 95 Unleaded petrol at the coast and R24.59 in Gauteng, with 93 Unleaded petrol climbing to R24.23.

Petrol and diesel prices in overdrive…

This means that the price of petrol is inching closer to R25 per litre, taking us back to October last year, when prices peaked at R25.86 per litre.

The wholesale price of 50ppm diesel, meanwhile, could rise to around R22.30 at the coast. This does not bode well for general inflation and transport costs impacting on retailers and consumers.

These projected increases follow February’s price hikes of 75 cents for petrol and up to 73 cents for diesel.

March fuel prices: Predicted changes for petrol and diesel

• Petrol 93: Increase of 135 cents per litre;
• Petrol 95: Increase of 131 cents per litre;
• Diesel 0.05% (wholesale): Increase of 143 cents per litre; and
• Diesel 0.005% (wholesale): Increase of 159 cents per litre.
  

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Crucial factors: Rand/dollar, oil prices

Fuel prices are primarily determined by the price of oil and the rand/dollar exchange rate.

The rand has once again found itself on the wrong side of R19 to the dollar this week, trending weaker against the greenback since the start of the month.

According to Investec chief economist, Annabel Bishop, President Cyril Ramaphosa’s State of the Nation Address (Sona) triggered this week’s downward spiral of the rand.

Bishop was quoted as saying by BusinessTech that the president’s annual address was not well received by markets.

“While the Sona was generally a flub on many fronts, the lack of urgency to address the various crises in South Africa – instead focusing on electioneering and patting himself and his administration on the back – left markets wanting,” she explained.

ALSO READ: ‘Ramaphosa just lied’: Opposition parties slam Sona speech

The global oil price, however, remains the main driving force behind the current under-recovery in fuel prices.

After settling below the $80 mark earlier in the month, oil prices rose by 6% last week due to ongoing geopolitical tensions, such as US-led strikes against the Yemeni militant group of Houthis in the southern Red Sea, as well as in Iran.

Israel’s military offensive targeting the southern city of Rafah in the Gaza Strip continues to unsettle Middle East markets and the prospects of an increase in supply due to an expansion of producers outside OPEC during 2024.

• At the time of writing on 14 February, the rand was trading at R19.10 to the US dollar and the price of Brent Crude Oil per barrel fluctuating near the $82 mark.

Who has the last say on fuel prices?

The Department of Mineral Resources and Energy (DMRE) has made a point in the past of reminding consumers 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 Wednesday, 6 March.

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