South African motorists should brace themselves for yet another significant increase in fuel prices come October.
The Central Energy Fund (CEF) has released its latest data, indicating that petrol and diesel prices are set to surge once more.
Mid-month data from the CEF reveals that petrol could see an increase ranging from R1.15 to R1.22 per litre, while diesel may rise between R1.93 and R2.03 per litre.
If these projections hold, motorists will witness fuel prices surpassing R25 per litre.
The expected changes are as follows:
– Petrol 93: An increase of 115 cents per litre
– Petrol 95: An increase of 122 cents per litre
– Diesel 0.05%: An increase of 203 cents per litre
– Diesel 0.005%: An increase of 193 cents per litre
– Illuminating paraffin: An increase of 187 cents per litre
It’s essential to note that the Department of Mineral Resources and Energy (DMRE) emphasizes that its daily snapshots do not predict other potential adjustments, such as slate levy modifications or retail margin changes, which are determined at month-end based on various factors.
The primary factors influencing domestic fuel costs are the rand/dollar exchange rate and international oil prices.
In South Africa, fuel prices are adjusted on the first Wednesday of each month based on these factors.
For October, much like September, both the exchange rate and oil prices are unfavorable for South Africa’s local pricing.
Rand/Dollar Exchange Rate:
The South African rand has remained weak throughout September, hovering around the R19 to the dollar mark.
The country’s worsening fiscal outlook, marked by a significant fiscal deficit of R143.8 billion in July, has raised concerns in the markets.
Economic data from the mining sector has also been weaker than expected, contributing to rand depreciation.
Global factors, such as China’s economic slowdown, inflation concerns in the US, and increased political instability in South Africa ahead of the 2024 elections, are further pressuring the rand.
As a result, the weaker rand is a key contributor to a 24-28 cents per litre under-recovery in fuel prices.
Oil Prices:
Oil prices remain the primary driver of fuel price under-recoveries, contributing between 90 cents and R1.76 per litre to expected price hikes by mid-September.
Oil prices have surged from just under $90 a barrel at the end of August to around $95 a barrel.
This increase is partly due to supply constraints from Saudi Arabia and Russia, as both the International Energy Agency and the Organization of Petroleum Exporting Countries have warned of a market deficit.
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Despite supply challenges, demand has remained relatively strong, with signs that the US may avoid a recession and positive economic data from China.
Crude prices have risen over 30% since mid-June, and analysts are now speculating that oil could reach $100 a barrel.
As a result, the expected fuel prices at the pumps for October are as follows:
Inland:
– 93 Petrol: R25.29
– 95 Petrol: R25.66
– Diesel 0.05%: R25.08
– Diesel 0.005%: R25.21
– Illuminating Paraffin: R19.28
Coastal:
– 93 Petrol: R24.57
– 95 Petrol: R25.04
– Diesel 0.05%: R24.40
– Diesel 0.005%: R24.52
– Illuminating Paraffin: R18.35
Motorists should prepare for these substantial price increases at the fuel pumps in October, with both global and domestic factors contributing to the surge.
