Fuel price forecast: Drop in petrol, mixed bag for diesel in July

A slight petrol price decrease is on the horizon for July. This would see a drop in the petrol price for a second month in a row.

The prospect of some welcome relief at the pumps comes as consumers are taking strain due to high interest rates and the relentless rising cost of living.

ALSO READ: How to survive the higher interest rate

Mid-month data from the Central Energy Fund (CEF) shows a small under-recovery in petrol prices due to a slightly stronger rand and soft global oil price.

Expected changes for petrol, diesel and paraffin prices

At this point, decreases of 4 cents per litre for 95 unleaded petrol and 13 cents per litre for 93 unleaded are on the cards for motorists. 

Diesel drivers are in line for the first increase in months, with the price per litre for 500ppm (0.05%) set to climb by 7 cents. There will be no price increase for 50ppm (0.005%) though.

• Petrol 93: decrease of 13 cents per litre
• Petrol 95: decrease of 4 cents per litre
• Regular Diesel (500ppm): increase of 7 cents per litre
• Low-sulphur diesel (50ppm): no change
• Illuminating paraffin: decrease of 6 cents per litre

A decrease of 4 cents will equate to a drop in the cost of 95 unleaded to R22.26 (inland) and R21.54 (coastal), with 93 unleaded decreasing to R22.17.

ALSO READ: WATCH: South Africa’s cheapest new electric car and bakkie debut

When will price adjustments take effect in July?

The Department of Energy (DOE), however, 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 5 July 2023.

ALSO READ: North West police officer released on R500 bail for alleged petrol theft

Crucial fuel price factors: Rand/dollar and global oil

Fuel price adjustments are basically determined by two main factors: The rand/dollar exchange and global oil prices. In South Africa, the fuel price is adjusted on the first Wednesday of every month.

Rand: The rand has recovered from its record-low of R19.91 to the dollar in May to trading at R18.40 on Thursday 15 June. This as the US Federal Reserve voted to pause its aggressive campaign of interest rate hikes. 

Oil: Weaker international oil prices during June could be the main driver of July’s fuel price cuts if the downward trend continues. A slowing Chinese economy and subsequently less overall demand for crude oil amid oversupply concerns, have set back the price to $69 a barrel.

NOW READ: We have one person to thank for the lowest rand ever – economist