After months of decreasing fuel costs, South Africa’s fuel price cuts may be coming to an end. Initially, significant reductions in petrol and diesel prices were expected for November 2024, but rising global oil prices and a weakening rand have dramatically shifted the outlook.
South Africa’s fuel prices are mainly determined by the Basic Fuel Price (BFP), which is calculated by the Central Energy Fund (CEF). The BFP is adjusted monthly based on data from the previous month. As of late September 2024, over-recoveries in petrol and diesel prices pointed to potential cuts of around R1.40 per litre. However, by 10 October 2024, these projections had almost vanished, with petrol over-recoveries reduced to just 4 cents for unleaded 95 and 13 cents for unleaded 93, while diesel cuts disappeared completely.
According to Investec’s chief economist, Annabel Bishop, the surge in fuel prices is due to two main factors: the rising Brent crude oil price, now above $80 per barrel, and the weakening rand. These shifts are largely influenced by escalating conflict in the Middle East, particularly following Iran’s missile attack on Israel in early October 2024. As tensions rise, global oil supplies face potential disruption, especially in key oil-producing countries like Iran and Saudi Arabia.
With these developments, South Africa is expected to see its first fuel price hike since May 2024.
Key Highlights:
- Petrol Price Cuts Shrinking: Over-recoveries for petrol reduced from R1.40 to 4 cents by mid-October.
- Diesel Prices Wiped Out: Initial reductions in diesel prices have disappeared due to rising oil prices.
- Middle East Conflict Impact: Escalating tensions between Iran and Israel are driving up global oil prices.
- Rand Weakens: The South African rand’s decline is contributing to the expected fuel price increase.
Table: Shrinking Over-Recoveries in Fuel Prices (as of 10 October 2024)
| Date | Unleaded 95 (R/litre) | Unleaded 93 (R/litre) | 50ppm Diesel (R/litre) | 500ppm Diesel (R/litre) |
|---|---|---|---|---|
| 27 September 2024 | R1.40 | R1.34 | R1.40 | R1.46 |
| 10 October 2024 | R0.04 | R0.13 | R0.00 | R0.01 |
Outlook for November
Without a significant reduction in oil prices, South Africa’s fuel prices are likely to increase in November, marking the first rise since May 2024.