Here is the expected petrol price for March

Mid-month fuel price data supplied by Engen sales and distribution company, East Cape Fuels shows that South African motorists can expect steep fuel price hikes in March.

The data covers the period to 15 February 2022 and shows significant increases for both petrol and diesel drivers, coming on the back of rising international petroleum prices.

Should current market conditions persist and these increases be realised, the hikes would see fuel prices pushed to record highs.

The mid-month changes are as follows:

• Petrol 95: increase of R1.26 per litre;
• Petrol 93: increase of R1.25 per litre;
• Diesel 0.05%: increase of R1.32 per litre;
• Diesel 0.005%: increase of R1.34 per litre;
• Illuminating Paraffin: increase R1.26 per litre.

The Department of Energy has stressed that the daily snapshots are not predictive and do not cover other potential changes like slate levy adjustments or retail margin changes, which is determined by the department at the end of the month, taking all variables into account.

The Department of Energy makes adjustments based on a review of the whole period. Furthermore, the outlook can change significantly before month-end.

Prices are affected by two main components – the rand/dollar exchange rate and changes to international petroleum product costs, primarily driven by oil prices.

At mid-February the ZAR/USD exchange rate has been on a strengthening trend, and is contributing to an over-recovery of around 14 or 15 cents per litre for petrol and diesel, respectively, with changes to international product prices being the main driver behind the fuel price increases.

Differences in price and refining costs for petrol and diesel create a divergent path on pricing, with diesel seeing an under-recovery of R1.46/R1.49 per litre in product price changes, while petrol shows an under-recovery of R1.40 per litre.

Exchange rate

The rand has remained resilient against the dollar in February. While many an investor expected the rand to buckle in the face of rising US Treasury yields and prospects of a more aggressive pace of Federal Reserve hikes, the currency has done the opposite, Bloomberg reported.

The rand is sometimes referred to in currency market circles as “the rattler,” because of its habit of snapping back hard in the opposite direction to a big move.

Citadel noted that the local unit bumped its head, again, at the key R15.00/$ level and retreated somewhat in trading on Tuesday. It traded at R15.14 against the dollar in afternoon trade on Wednesday.

Oil prices

Global oil prices have been under pressure due to tensions around a possible Russian invasion of Ukraine. Energy minister Gwede Matashe this week warned that the crisis could lead to higher costs for local motorists.

“We should pay attention to the developments between Western countries and the Russian Federation on the Ukraine matter, in so far as it impacts crude oil prices,” Mantashe said in his debate on the State of the Nation Address address on Tuesday (15 February).

“This could result in huge increases in fuel prices globally and negatively affect local consumers and transport users.”

The Brent Crude oil price has swung wildly this week amid a flurry of reports about the Ukraine issue.

While the US had earlier warned an invasion may be imminent, Russian Foreign Minister Sergei Lavrov said Tuesday that diplomatic efforts would succeed in easing the situation. Moscow has repeatedly denied it plans to attack.

Tensions eased on Wednesday as Russia started to send some troops back to their bases after Russian foreign officials showed a willingness to resolve tension through diplomatic channels, noted financial services firm Citadel.

The underlying oil market is one of the strongest in years. S&P Global Platts assessed the Dated Brent price, which values more than half of the world’s crude, at more than $99 a barrel on Monday, traders said.

This is how the price changes are expected to reflect at the pumps:

Read: Energy minister warns of ‘huge’ petrol price increases due to Russia-Ukraine conflict