Fuel projections for November show some good news for petrol and diesel prices. Photo: iStock
Despite a spike in global oil prices due to the escalation of the Israel-Hamas conflict into war, early data point to a possibility of lower fuel prices in November.
This glimmer of hope comes on the back of October’s significant fuel price increase which nudged the price of all fuel grades above the R25 per litre mark.
The last time Mzansi motorists were given a break from the ever-rising cost of petrol, was way back in July. Diesel has seen cumulative hikes of R5.71 since June.
One could therefore be forgiven for getting all revved up at the mere prospect of being able to take a Sunday afternoon drive to a destination other than the corner shop.
Instead of “going NOWHERE slowly”, one could actually be “going SOMEWHERE slowly”…
The latest daily snapshot from the Central Energy Fund (CEF) is showing an over-recovery which points to potential price cuts of about R1.60 for both grades of petrol, and up to 30 cents for diesel.
Fuel prices are primarily governed by the rand/dollar exchange rate and international oil prices.
The conflict between Israel and Hamas in the Gaza Strip sparked a rise of about 4.6% in Brent Crude Oil prices between Saturday and Tuesday, taking it from $84.4 per barrel to $88.3, Reuters reported.
AFP explained that accusations of Tehran assisting Hamas in planning the past weekend’s unprecedented border attacks, raised concerns Israel could hit major crude producer Iran, which in turn would send prices surging.
ALSO READ: Oil soars as Hamas attack on Israel sparks war
It is important to keep in mind, however, that the commodity fell by about 11% the previous week (its biggest weekly decline since March) amid fears of a global recession and another partial lifting of Russia’s fuel export ban.
This means oil is still less expensive than what was the case in October 2022, when it surpassed the $90 mark before peaking at $94 at the end of the month.
If the price of Brent Crude has indeed settled at the $88 mark for now, then state of over-recovery will most likely stay in place – hoping there is no rand/dollar exchange shock.
Although our currency has been trading at around R19 to the greenback, economists expect a relatively stable environment until the end of the year, according to BusinessTech.
ALSO READ: Rand weakness and inflation worries: What’s ahead for SA’s repo rate?
If these market conditions were to remain consistent for the remainder of the month a decrease of 185 cents is expected for petrol 93 octane users and a decrease of 189 cents for 95 users.
Meanwhile, diesel motorists would see something around a 65 to 71 cents per litre decrease.
Finally, illuminating paraffin is expected to decrease by 69 cents.
According to the Department of Energy, the CEF’s daily snapshots on the over-recovery and under-recovery of the basic fuel price do not encompass other possible modifications.
The department determines these adjustments, after considering various factors such as slate levy adjustments or retail margin changes whereby the controlled prices are adjusted on the first Wednesday of each month.
In its analysis of the fuel price trend in 2023, FNB explained that within the total price of fuel domestically, taxes and levies make up 31%, with the general fuel levy and Road Accident Fund (RAF) levy accounting for the largest portion.
Government receives a revenue of R95 billion from the general fuel levy, which is used to fund public services.
Speaking to Newzroom Afrika last month, the People Against Petrol and Paraffin Price Increase’s (PAPPI’s) Visvin Reddy said the government could consider other alternatives to maintain its finances.
“That R95 billion doesn’t need to come from motorists and fuels. It can come from a special tax on the monopoly industry that sits on the JSE,” said Reddy.
“Take that R95 billion from a special tax on those companies, and immediately reduce the price of petrol in this country by 35%.”
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