Downhill until Christmas? Three-year low in petrol and diesel prices expected for October

With the official fuel price adjustments coming into effect next week, the good news is that Mzansi motorists can expect further petrol price cuts in October, thanks to weak global oil prices and a stronger rand.

Even better news is that both petrol and diesel prices are expected to dip to levels last seen in February 2022.

Should the expected price cut become a reality at the pumps on Wednesday, 2 October, this would represent a massive R4.60 cut in petrol prices since October 2023.

A year ago, petrol 95 prices were at an eye-watering high of R25.68 per litre, while diesel (0.05%) was sitting at R25.02.

October would be the  fifth consecutive month of petrol price cuts and the sixth for diesel prices.

October fuel prices: Expected changes in petrol and diesel 

The latest data from the Central Energy Fund (CEF) is pointing to petrol price decreases of between R1.05 (93 Unleaded) and R1.12 (95 Unleaded), while diesel looks set to go down by R1.10 (50ppm) to R1.12 (500ppm).

If the recoveries hold, a litre of 95 Unleaded petrol will cost R20.28 at the coast and R21.07 in Gauteng, where the price of 93 Unleaded will be around R20.74 come October.

Fuel price drivers: Rand/dollar and global oil prices

Petrol and diesel price changes are implemented on the first Wednesday of every month and are determined by two factors:

• The rand/US dollar exchange rate, which determines how fuel is purchased.
• Global oil prices, which determine how much fuel costs to purchase.

The big reductions in fuel prices can be attributed to a much weaker oil price in 2024, which has been driven by economic slowdowns in global markets and the failure of oil-producing nations (OPEC) to effectively counter this.

The price of Brent Crude Oil has declined from a 2024 peak of $94 per barrel to $74 this year so far.

On Friday afternoon, the rand reached its best level since July 2023, trading at around R17.09 against the American greenback.

While the rand has firmed up against the dollar off the back of more positive sentiment around the Government of National Unity (GNU) and the end of load shedding, it is still nowhere near its fair value of around R15/$.

Petrol and diesel prices: Downhill until Christmas?

Old Mutual Wealth Investment Strategist, Izak Odendaal, told BusinessTech that fuel prices could be on a downhill path until Christmas with two

“While petrol inflation was still positive in the August CPI [Consumer Price Index] report at 1.7% year-on-year, the October report will reflect two more rounds of fuel price cuts, taking petrol inflation down to around -20% year-on-year.

“Since petrol is 5% of the overall basket, this will subtract around one percentage point from overall inflation, which was at a three-year low of 4.4% in August,” he said.

Potential changes

The CEF is a state-owned energy company reporting directly to the Department of Mineral and Petroleum Resources.

The latest data update however comes with the caveat that the unaudited CEF snapshots are not predictive and do not cover other potential changes to the fuel price like slate levy adjustments or retail margin changes.

The changes will kick in from Wednesday, 2 October.

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