Here is the expected petrol price for March

Mid-month data from the Central Energy Fund points to another hike in fuel prices in March, following sizeable increases in the first two months of 2021.

The CEF data shows an under-recovery in prices across the board, expected to rise around 55 cents per litre for petrol, and 46 cents per litre for diesel.

  • Petrol 95: increase of 56 cents per litre;
  • Petrol 93: increase of 54 cents per litre;
  • Diesel 0.05%: increase of 45 cents per litre;
  • Diesel 0.005%: increase of 47 cents per litre;
  • Illuminating Paraffin: increase of 40 cents per litre.

While the mid-month data serves as a snapshot, the Department of Energy makes adjustments based on a review of the full period. Furthermore, the outlook can change significantly before month-end.

The mid-month prices provide a strong indication of moving trends. Prices are affected by two main components – the rand/dollar exchange rate, and the changes to international petroleum product costs, largely driven by oil prices.

At mid-February, the ZAR/USD exchange rate is contributing to an over-recovery of around 8 cents per litre – however, rising international product prices are contributing to an under-recovery of around 64 and 54 cents per litre to the under-recovery for petrol and diesel, respectively, causing the deficit.

Exchange rate

The rand is currently trading at a 52-week high against the dollar at R14.50. Strength has been largely attributed to a weakening dollar, hit by massive stimulus plans in the United States.

According to Bianca Botes, executive director at Peregrine Treasury Solutions, the dollar hit a fresh two-week low as the recovery of the US economy remains questionable.

“The US Fed expressed its dovish stance last week, with the US slower in the race to economic recovery than initially expected,” she said.

The rand faces headwinds in the coming weeks as finance minister Tito Mboweni is expected to deliver a difficult budget at the end of the month.

Ratings agencies have warned that, unless South Africa can get its debt under control, further credit rating downgrades could be on the way, which will undoubtedly impact the local unit. But to achieve this, National Treasury will have to balance cuts in expenditure, and new tax sources with additional strains on the balance sheet such as extended Covid-19 grants and payments.

The speech is scheduled for 24 February.

International product prices

Continuing the trend seen since the start of the year, international product prices used in the production of fuel have continued to rise, in line with global oil prices.

Prices have long shot past the lows experienced in 2020, now trading at between $61 and $64 a barrel. This is compared to the $50 dollar mark seen in December, and up from $56 a barrel in February.

Oil prices are rising because of simple supply and demand economics: global oil production is subdued, while inventories – particularly in the US – are depleting, pointing to a boost in demand.

Analysts have questioned how high the oil price can go, but remain bullish, as oil-producing countries have committed to keeping production low, while demand is forecast to grow at around 6%.

As has been the case since the Covid-19 pandemic took hold, however, patterns can change rapidly. Some oil producers see demand declining in the coming months as lockdowns in key economies remain – while the northern hemisphere moving into a warmer weather cycle will also impact demand.

Analysts see upside risks for the commodity at around $65 a barrel.

This is how the expected prices would reflect:

Fuel (Inland) February official March expected
95 Petrol R15.67 R16.23
93 Petrol R15.50 R16.04
0.05% Diesel (wholesale) R13.58 R14.03
0.005% Diesel (wholesale) R13.61 R14.08
Illuminating Paraffin R7.99 R8.39

Read: What to expect from the petrol price in South Africa in 2021: economist

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Here is the expected petrol price for March