February fuel price shocker: Expect another hike in petrol and diesel

Rising global oil prices and a weaker rand have launched petrol and diesel prices on an alarming upward trajectory for the month of February

The projected hike is set to follow on the short-lived relief for Mzansi motorists at the pumps when festive fuel price cuts resulted in January’s R22.17 per litre for 93 Unleaded petrol and R22.49 for 95 Unleaded. Diesel also saw a decrease of between R1.18 and R1.26 per litre.

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February fuel price: Expected changes for petrol and diesel

According to the latest daily snapshot provided by the Central Energy Fund’s (CEF), diesel and petrol prices are aligned in their under-recoveries.

Motorists should brace themselves for a hike of 43 cents per litre for 95 Unleaded petrol, while the price of 500ppm diesel could climb 40 cents per litre in February.

What if the under-recovery persists?

The latest projected increases might even be higher if the under-recovery persists until the time comes for the Department of Mineral Resources and Energy (DMRE) to finalise the fuel prices. Here’s why…

A rather unsettling factor in play at the moment, is an upwards shift of about six cents per day. This could translate in a worst-case scenario of petrol and diesel both climbing towards the 80 cent mark.  

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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.

Both a weaker rand and higher global oil price are contributing factors to the current under-recovery trajectory.

According to BusinessTech, the main driver of the under-recovery is the global oil price.

Geopolitical tensions, such as US-led strikes against Iran-backed Houthis in Yemen and the Gaza war, have dashed the hope for an increase in supply due to an expansion of producers outside OPEC during 2024.

At the time of writing, on 25 January, the international price of Brent Crude oil was listed at $80 (after starting off the year at about $75 a barrel).

The rand was trading at R18.90 to the US dollar, bouncing back from an eyewatering R19.20 earlier this week.

Who has the last say on fuel price?

The DMRE 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 Wednesday, 7 February.