South African motorists could soon face a significant hike in petrol prices, with estimates suggesting a possible increase of nearly R4 per litre, while diesel prices may jump by as much as R6.75 per litre. The latest fuel price data from the Central Energy Fund reveals a growing gap between current pump prices and the cost of fuel based on international markets.
The average under-recovery for petrol 95 was 397.802 cents per litre, while petrol 93 was 361.817 cents per litre. Diesel showed even larger under-recoveries of 663.465 cents per litre for 0.05% diesel and 674.686 cents per litre for 0.005% diesel. In rand terms, this translates to roughly R3.98 per litre for petrol 95, R3.62 per litre for petrol 93, and about R6.63 to R6.75 per litre for diesel.
Petrol Price Increase: What’s Behind the Hike?
The main driver of the potential price increase is the recent escalation of conflict in the Middle East, which has led to higher international fuel prices. The Department of Mineral Resources and Energy has noted that the rand-dollar exchange rate has also played a role in pushing up costs. Global oil markets have been under pressure due to the conflict, with the US and Israel carrying out strikes on Iran in late February, prompting a response from Iran and raising fears of a wider regional conflict.
Impact on South African Households
Households using paraffin could also face a steep increase, with illuminating paraffin showing an under-recovery of about R8.53 a litre if current trends continue. According to Nick Hedley of Zero Carbon Analytics, SA is highly exposed to the conflict due to its reliance on imported crude oil and refined fuel. “SA is a net importer of crude oil and oil products,” he said. “Fuel prices will be pushed higher by two factors: the much higher oil price, and the weakened rand as investors flee to safe-haven assets, mainly the US dollar. This will push up inflation throughout the economy, given that people, food, and goods are mostly transported by road.”
A similar shock was felt in SA after Russia invaded Ukraine in February 2022, triggering a global energy crisis that pushed oil, food, and fuel prices sharply higher. Inflation in SA rose by 2.1 percentage points in the months that followed, climbing from 5.7% to 7.8% in just five months, with food inflation reaching 10.1% by July 2022 as prices for grains, cooking oils, fish, and meat surged. The potential petrol price hike has significant implications for SA households, with Statistics South Africa data showing that transport costs account for a significant portion of household expenses.
Here are some key points to consider:
- Petrol prices may increase by nearly R4 per litre
- Diesel prices may jump by as much as R6.75 per litre
- The conflict in the Middle East is driving up international fuel prices
- The rand-dollar exchange rate is also contributing to higher costs
- Households using paraffin may face a steep increase in prices
