Mid-month data from the Central Energy Fund (CEF) indicates that South African motorists can expect another significant drop in fuel prices next month, aided by favourable global oil prices.
The CEF data suggests the following reductions:
Petrol 93: down R1.18 per litre
Petrol 95: down R1.12 per litre
Diesel 0.05% (wholesale): down 55 cents per litre
Diesel 0.005% (wholesale): down 49 cents per litre
Illuminating paraffin: down 45 cents per litre
While these cuts are slightly smaller than the R1.50 per litre reduction anticipated at the beginning of the month, they still represent a notable price decrease.
The Department of Mineral Resources and Energy (DMRE) notes that daily snapshots from the CEF are not predictive and do not account for potential adjustments like the slate levy or retail margin changes.
Final fuel price adjustments are determined at the end of the month, influenced by the rand/dollar exchange rate and international oil prices.
The price adjustments are implemented on the first Wednesday of every month.
Currently, the global oil price is the primary factor driving the reduction, as the rand's volatility has led to an under-recovery of around 16 cents per litre.
The rand's instability stems from the political uncertainty following the 2024 national election, where the ANC secured only about 40% of the vote, necessitating alliances with opposition parties to form a government.
This has caused market fluctuations, with the rand trading at R18.45 to the dollar, weaker than the pre-election R18.10 but stronger than the post-election R18.80+.
Despite recent optimism due to the likely formation of a Government of National Unity (GNU), market confidence remains tentative, contributing to the current fuel price dynamics.
Global oil prices have improved significantly, dropping below $85 a barrel and currently sitting at $83.
Bloomberg analysis attributes the decline in oil prices in June to a risk-averse sentiment in broader financial markets and increased signs of strong global supply.
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