Mid-month data from the Central Energy Fund shows that South African motorists could be in store for a significant petrol price cut in July.
The group’s latest data (to 13 June 2019) shows a large over-recovery for both grades of petrol, diesel and illuminating paraffin.
Should current conditions persist for the next few weeks, the petrol price could be cut by around 90 cents per litre come July, while diesel could see a 70 cents per litre drop.
The biggest contributor to the price forecast is a significant drop in the price of international petroleum products, which are down by 14% in the last month, driven by falling oil prices.
However, news of apparent attacks on oil tankers in the Gulf of Oman on Friday (14 June) are likely to lead to a reversal in the recent trend.
The spot price of oil on Friday saw brent crude at $62 a barrel, up more than 3% on news of the tanker attacks.
Oil prices had lingered around $70 a barrel for the last two months, fluctuating on trade talks between US president Donald Trump, and China.
As it currently stands, international petroleum prices are contributing to a 106 cents per litre drop in local petrol prices – however this is subject to change.
Impact of the currency
Not helping South Africa’s petrol prices so far in June, however, is a weakening rand.
The local unit experienced a brief move above R15 to the dollar in June, and has maintained a weaker position – in the R14.80 range – following a slew of poor data and political uncertainty.
The country reported its biggest quarterly decline in a decade for Q1, showing a 3.2% contraction in GDP, while ANC leaders bickered over the party’s policy on the South African Reserve Bank.
The currency has also been battered by international factors, with Trump’s trade talks again hurting global sentiment towards emerging markets.
South Africa’s weaker exchange rate is currently contributing a 17 cents per litre hike in prices.
Based on the latest available data, this is how petrol prices could change in July.
|Fuel (Inland)||June Official||July Expected|
|0.05% Diesel (wholesale)||R15.21||R14.52|