Mid-month data from the Central Energy Fund (CEF) indicates that motorists in South Africa can expect another significant reduction in fuel prices in September, Cape {town} Etc reports.
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According to the CEF’s projections, petrol prices could drop by approximately 65 cents per litre, while diesel prices are likely to decrease by 53 to 77 cents per litre.
If current market trends continue, this will mark the fifth consecutive month of fuel price reductions, bringing some relief to drivers and putting the year-to-date adjustments in positive territory.
The expected changes are as follows:
- Petrol 93: down by 62 cents per litre
- Petrol 95: down by 67 cents per litre
- Diesel 0.05% (wholesale): down by 53 cents per litre
- Diesel 0.005% (wholesale): down by 77 cents per litre
- Illuminating paraffin: down by 78 cents per litre
It’s important to note that the CEF does not provide daily snapshot data for LP Gas.
The Department of Mineral Resources and Energy (DMRE) has emphasised that these daily snapshots are not predictive and do not account for other potential adjustments, such as slate levy changes or retail margin shifts.
The department determines the final adjustments at the end of the month, considering various factors.
Fuel prices in South Africa are mainly influenced by the rand/dollar exchange rate and international oil prices.
These prices are adjusted monthly on the first Wednesday, based on these two factors. For September, oil prices have been lower compared to July, but the rand has weakened slightly, which has slightly offset the over-recovery.
Oil prices are currently trading below $80 per barrel, a positive sign for local fuel pricing.
Recent market volatility has been driven by concerns over a possible recession in the United States, tensions in the Middle East, and a slowdown in China’s economy, the world’s largest oil consumer.
Despite this, oil prices have stabilised in recent sessions, with concerns over potential Iranian actions against Israel outweighing weaker Chinese demand data.
According to Bloomberg’s analysis, crude oil prices have declined from their peak in early July due to a dim outlook for consumption in China, where demand has been dampened by the increased use of cleaner fuels. OPEC has lowered its global demand forecast for 2024, and the International Energy Agency’s data suggests the market could experience a surplus next quarter if OPEC follows through with plans to increase supply.
Brent crude recently traded near $80 per barrel after dropping 3.1% over two days. In China, apparent oil demand fell by 8% in July compared to a year ago, further dampening the outlook for Asia’s largest economy.
In South Africa, the current oil prices are contributing to an over-recovery of 58 to 82 cents per litre in local pricing, according to Business Tech.
The rand has also had a turbulent few weeks in August, influenced by market fluctuations and a sustained positive shift in sentiment regarding the Government of National Unity and expected reforms.
Investec Chief Economist Annabel Bishop predicts continued volatility for the rand, particularly as the start of interest rate cuts approaches.
The US Federal Reserve is expected to begin cutting rates in September, which could strengthen the rand. However, the South African Reserve Bank is also anticipated to start its cutting cycle around the same time, which may limit the rand’s gains.
Currently, the rand is trading at around R18 to the dollar, stronger than the R18.60/$ seen after the recent market panic but still weaker compared to July, when it traded below R18.00 following the positive outcome of the 2024 elections and the formation of a new government. The weaker rand relative to July is causing a 5 cents per litre under-recovery in local pricing.
Here’s how the price changes will be reflected at the pumps (note that diesel prices are wholesale, so pump prices may vary):
Inland | August Official | September Expected |
93 Petrol | R22.71 | R22.09 |
95 Petrol | R23.11 | R22.44 |
Diesel 0.05% (wholesale) | R20.38 | R19.85 |
Diesel 0.005% (wholesale) | R20.74 | R19.97 |
Illuminating Paraffin | R14.80 | R14.02 |
Coastal | August Official | September Expected |
93 Petrol | R21.92 | R21.30 |
95 Petrol | R22.32 | R21.65 |
Diesel 0.05% (wholesale) | R19.59 | R19.06 |
Diesel 0.005% (wholesale) | R19.98 | R19.21 |
Illuminating Paraffin | R13.80 | R13.02 |
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