Here is the expected petrol price for April

 ·15 Mar 2022

Mid-month data from the Central Energy Fund shows that South African motorists face further pain at the pumps in April, due to an expected massive hike in both petrol and diesel prices.

The data covers the period to 14 March 2022 and shows significant increases for both petrol and diesel vehicle owners, amid rising international petroleum prices as a result of Russia’s invasion of Ukraine.

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

The mid-month changes are as follows:

  • Petrol 95: increase of R2.27 per litre;
  • Petrol 93: increase of R2.19 per litre;
  • Diesel 0.05%: increase of R3.12 per litre;
  • Diesel 0.005%: increase of R3.26 per litre;
  • Illuminating Paraffin: increase R2.66 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.

The Central Energy Fund and the government are meeting on Tuesday (15 March) to discuss possible interventions to assist with managing fuel prices. Economists and analysts have suggested temporarily cutting fuel levies to provide some relief.

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

Both components have been affected by the Russia-Ukraine war over the last few weeks, leading to significant increases in fuel costs across the world.

Rand/Dollar exchange rate

As markets remained vulnerable to news coming out of Ukraine, the rand benefitted from the turmoil with investors moving to safer assets in the commodity market.

Although the South African currency is considered a relatively risky asset, it gained favour amid rising gold, palladium and coal prices.

However, the local unit weakened on Monday as the rally in commodity prices eased and markets braced for rate hikes in the United States and Britain, Reuters reportsed.

Nedbank analysts said the foreign exchange markets remained vulnerable to developments in Ukraine, but the focus this week is also on the upcoming Federal Open Market Committee (FOMC) meeting.

The meeting is expected to begin hiking interest rates from their pandemic lows, with investors also watching projections for the frequency and size of future rate increases.

According to Citadel Global, markets anticipate that the US Fed will hike interest rates during the Wednesday meeting, meanwhile, US and Chinese officials will continue discussions on the war in Ukraine.

Oil prices

The biggest shock for global markets coming out of the war is the oil price. At the time of the initial attack on Ukraine, oil was already trading towards the $100 per barrel mark. However, the news of Russia’s invasion rapidly pushed prices well over the $100 threshold.

In the weeks that have followed, sanctions on Russia – an oil and gas producer – have hit global prices hard, and a decision from foreign markets to reject Russian oil and other fuels pushed prices over $120 per barrel. For context, oil hit record highs of $140 a barrel in 2007.

The heat is coming out of the oil market, Bloomberg reported.

Following assurances from OPEC and other oil bodies that there is no global oil shortage, the heat from the oil market has rapidly died down. Covid concerns, especially in China, have also cooled off demand, leading to a drop.

According to analysis from Bloomberg, West Texas Intermediate oil futures have shed around 20% since closing at the highest since 2008 a week ago, dropping below $100 a barrel on Tuesday. That followed a tumultuous period of trading that saw prices fluctuate wildly, with intraday swings for global benchmark Brent crude eclipsing $20.

“The latest developments to rattle the market are a resurgence of (Covid) virus cases in China, the world’s biggest crude importer, and what appears to be progress in cease-fire talks between Ukraine and Russia.

“While there are still concerns that the disruption to Russian oil flows is squeezing an already tight market, OPEC and others have been quick to point out there is no shortage,” the group said.

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

Fuel (Inland) March official April expected
95 Petrol R21.60 R23.87
93 Petrol R21.35 R23.54
0.05% diesel (wholesale) R19.49 R22.61
0.005% diesel (wholesale) R19.55 R22.81
Illuminating Paraffin R13.19 R15.85

Read: South Africa faces record-high petrol price hike in April – government asked to intervene

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