South African motorists can expect a drop in petrol and diesel prices next week, despite an impending hike in the general fuel levy.
Month-end data from the Central Energy Fund (CEF) indicates a continued over-recovery in fuel prices, which remains sufficient to offset the upcoming tax increases.
Finance minister Enoch Godongwana confirmed inflation-linked increases to the General Fuel Levy in his third national budget, earlier in May.
This marks the first adjustment to the levy in three years and is intended to help fill the revenue gap left by the decision not to raise VAT.
Effective 4 June 2025, the levy will rise to R4.01 per litre for petrol and R3.85 per litre for diesel.
However, the Road Accident Fund levy will remain unchanged at R2.18 per litre, and the carbon fuel tax will increase by 3 cents per litre, in line with previous budgets.
These changes translate to a total tax increase of 16 cents per litre for petrol and 15 cents per litre for diesel.
Oil prices were headed for a second consecutive weekly loss, as investors weigh a potentially larger OPEC+ output hike for July, and uncertainty spreads around US tariff policy, Reuters reported.
Brent crude traded at around $63.80 a barrel on Friday.
“The oil price would probably only come under greater pressure if the oil-producing countries were to increase their production even more than in previous months or give indications that there will be similarly high production increases in the following months,” Commerzbank analysts said.
A US federal appeals court on Thursday temporarily reinstated President Donald Trump’s tariffs, reversing a lower trade court’s decision just a day earlier to block the sweeping duties.
Oil prices have dropped more than 10% since Trump unveiled the so-called “Liberation Day” tariffs on April 2, underscoring market concerns over the escalating trade tensions.
The rand held just under R18 against the dollar on Friday after the South African Reserve Bank (Sarb) earlier presented detailed modelling comparing the impact of a 3% inflation target to the current midpoint goal of 4.5% within its 3% – 6% target range.
Resuming interest rate cuts on Thursday after pausing in March, the Sarb noted that its Monetary Policy Committee viewed a 3% target as “more attractive” and would continue to assess future policy scenarios based on that benchmark.
“Investors focused on the implications of a lower target, namely lower inflation, reduced interest rates, bond market inflows, and stronger long-term growth, which further support the rand,” ETM Analytics said.
Additional factors supporting rand resilience include a healthy trade surplus, a tight credit cycle, and emerging signs of fiscal prudence, the research firm added in a note.
Despite the added taxes, CEF data suggests fuel prices will still decline, thanks to positive pricing trends throughout the month.
The current over-recovery stands at 20 cents per litre for petrol and 52 cents per litre for diesel.
Before and after the levy increases vs April and May 2025 official prices:
| Fuel Type | April 2025 | May 2025 | June Projection | June Projection (After Levy) |
|---|---|---|---|---|
| Petrol 93 | R21.51 | R21.29 | R21.09 (↓20c) | R21.25 (↓4c) |
| Petrol 95 | R21.62 | R21.40 | R21.20 (↓20c) | R21.36 (↓4c) |
| Diesel 0.05% (wholesale) | R19.32 | R18.90 | R18.38 (↓52c) | R18.53 (↓37c) |
| Diesel 0.005% (wholesale) | R19.35 | R18.94 | R18.42 (↓52c) | R18.57 (↓37c) |
| Illuminating Paraffin | R13.36 | R13.05 | R12.49 (↓56c) | R12.49 (no levy impact) |
| LPGAS (per kg) | R37.77 | R38.23 | — | — |
