Another turn for petrol prices in South Africa
Early data from the Central Energy Fund (CEF) shows that the momentum from the stronger rand is slowing, with fuel price recoveries much lower than last month and declining.
This means the pendulum is slowly swinging in the opposite direction at the start of the month, as the rand settles above R16.00/$ and global oil prices remain higher.
According to the CEF, petrol prices are still in positive territory, with an over-recovery of around 22 cents per litre.
However, this is down from around 50 cents per litre at the start of the month, just a few days ago, reflecting the shift in markets.
Diesel recoveries, meanwhile, started the month in the red and have declined further, currently sitting with an under-recovery of around 34 cents per litre.
These are the projected levels at the start of the month:
- Petrol 93: decrease of 22 cents per litre
- Petrol 95: decrease of 23 cents per litre
- Diesel 0.05% (wholesale): increase of 33 cents per litre
- Diesel 0.005% (wholesale): increase of 35 cents per litre
- Illuminating paraffin: increase of 10 cents per litre
The turn in recoveries is largely due to the base effects of global oil prices, which started rising sharply at the end of January, amid geopolitical tensions between the US and Iran.
This has led to a much smaller over-recovery for petrol and negative recoveries for diesel.
The rand, which traded below R15.70/$ in January, has moved back above R16.00/$ but is still much stronger relative to its first-month averages.
Because of this, the exchange rate is still contributing to an over-recovery for both petrol and diesel, though also on a downward path.
The rand’s recent losses against the dollar are still being driven by a strengthening greenback, with markets still focused on the appointment of Kevin Warsh as chair of the US Federal Reserve.
“The ZAR is right on a resistance level. Having been one of the darlings a couple of weeks ago, it has now (become one of) the worst performers,” said Adam Phillips, treasury specialist at Umkhulu Treasury.
“Being an (emerging market) currency with a high beta will always cause volatility.”
Budget could bring more trouble
Because fuel price recoveries are effectively on the cusp and could go either way, they are at risk of being impacted by a myriad of strike points for the rest of the month.
Whether it is unpredictable action from Washington or something happening locally, it could be an incredibly volatile month.
At least one major risk factor lies ahead: the 2026 budget.
According to Investec Chief Economist Annabel Bishop, the budget being tabled at the end of the month could introduce additional fuel taxes, as was the case for 2025.
This could be through increases to the general fuel levy, carbon taxes or any other tax linked to the petrol price, which make up about half of the total price paid by motorists.
Depending on the quantum of the increase, most if not all of the over-recovery currently built into petrol prices in particular could be erased, she said.
The fuel levy is one of the easiest sources of tax revenue to tap into, and the National Treasury may feel inclined to play ‘catch up’, considering the levy had been frozen from April 2022 to May 2025—three years of no increases.
South Africa’s fuel tax was hiked by 15 cents per litre in the 2025 budget as the National Treasury sought additional revenue to offset the loss of a planned VAT hike.
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