Uphill from here? SA’s petrol and diesel prices heading for a U-turn

South Africa’s fuel price party is winding down with mid-month indications showing that the country is facing its first increase in months in petrol and diesel prices in November.

The forecast is turning into a pretty dismal one for South African motorists who have clocked up five consecutive months of significant cuts in petrol and diesel prices.

The first two weeks of the review period for November’s potential fuel price adjustments show a rapid decline in recoveries for petrol and diesel prices.

The U-turn on over-recoveries is the result of surging global oil prices and a weaker rand.

Strong possibility of petrol price hikes

If the trend persists until the official fuel price adjustments are announced by the Department of Mineral and Petroleum Resources at the end of the month, there is a strong possibility of petrol price hikes.

After the first day of the review period for November’s prices (27 September 2024) the per-litre retail price of 95 Unleaded and 93 Unleaded petrol showed over-recoveries of about R1.40 and R1.34, respectively.

Data also pointed to a drop in 0.05% and 0.005% wholesale diesel prices of around R1.40 per litre.

A sudden swing on 1 October 2024 saw recoveries starting to shrink rapidly with over-recoveries of 95 Unleaded and 93 Unleaded petrol tumbling to 4 cents and 13 cents, respectively.

November fuel prices: Expected changes in petrol and diesel 

As of Monday, 15 October 2024, the tables have completely turned on the over-recoveries.

The latest data by the Central Energy Fund (CEF), shows an under-recovery (Read: price increase) of 6 cents per litre for 95 Unleaded, while wholesale diesel (0.05% and 0.005%) is showing an under-recovery of around 7 cents per litre.

The only exception is 93 Unleaded petrol, which is still showing an over-recovery of 4 cents per litre.

• Petrol 93: Decrease of 4 cents per litre
• Petrol 95: Increase of 6 cents per litre
• Diesel 0.05%: Increase of 7 cents per litre
• Diesel 0.005%: decrease of 7 cents per litre

Investec chief economist Annabel Bishop has pointed out that the two biggest factors influencing the price of fuel in South Africa – the oil price and dollar-to-rand exchange rate – have both swung against price reductions in November.

Rand/dollar and global oil prices wipe out over-recoveries

In a My Broadband report, Bishop explained that the Brent crude oil price increased to more than $80 per barrel in the past week and over R1,400 per barrel as the rand weakened.

At the price of writing on Monday, 14 October, the rand stood at R15.78 against the American greenback.

The surging oil price is driven by the escalating conflict in the Middle East between Israel and Iran in Lebanon.

The biggest event was Iran’s missile attack on Israel on 1 October 2024, which came in retaliation to attacks on Hezbollah targets in Lebanon.

A sudden decrease in the oil price – and therefore an improved outlook for petrol and diesel prices in South Africa – seems unlikely given the instability in the Middle East.

The official fuel price adjustments will come into effect on Wednesday, 6 November.

Stay tuned to The Citizen for more fuel price updates towards the end of this month.

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