Here is the expected petrol price for July

 ·15 Jun 2022

Mid-month data from the Central Energy Fund points to further fuel price pain for diesel and petrol vehicle owners in July.

The data, which serves as a snapshot of market conditions as of 14 June 2022, shows that the petrol price could increase by as much as R2.03 per litre next month, while diesel is showing an under-recovery of R1.28.

The mid-month snapshot is as follows:

  • Petrol 95: under-recovery/increase of 203 cents per litre;
  • Petrol 93: under-recovery/increase of 186 cents per litre;
  • Diesel 0.05%: under-recovery/increase of 128 cents per litre;
  • Diesel 0.005%: under-recovery/increase of 128 cents per litre;
  • Illuminating Paraffin: under-recovery/increase of 153 cents 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 are determined by the department at the end of the month, taking all variables into account.

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

The steep price increases forecast for July comes despite the government extending its fuel price interventions for a further two months. R1.50 was kept off the general fuel levy in June and will drop to R0.75 in July. The relief will be withdrawn in August.

Motorists have had to grapple with sharply rising fuel prices since the beginning of the year. Fuel prices have increased some 20% since January, and over 40% year-on-year.

Aside from the temporary relief provided by removing part of the general fuel levy, the government’s other interventions have been lacklustre. The DoE has only managed to reduce the basic fuel price by three cents per litre – with an additional 10 cents per litre removed for Petrol 95 in Gauteng by scrapping a demand-side management levy.

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.

Exchange rate

The rand strengthened on Tuesday (14 June), as the dollar consolidated gains near a two-decade peak amid fears that aggressive interest rate hikes by the Federal Reserve would push the US economy into recession.

“Sell everything but the dollar” is resounding across trading desks as investors reprice the risk that the Federal Reserve hikes interest rates more aggressively than previously thought, Bloomberg reported.

Traders now see the Fed jacking up borrowing costs by 175 basis points by its September decision, which would mean at least one 75 basis-point move, it said.

This has put other currencies, especially emerging market currencies like the rand, on the back foot, leading to the local unit giving up gains made over the last week. Pressure is also coming from the local central bank, which is expected to chase a hike cycle more aggressively in the coming months.

BNP Paribas senior economist Jeff Schultz said in a note that the South African Reserve Bank is expected to maintain a 50 basis points pace of hikes for its three remaining meetings in 2022, followed by a final 25 bp hike in January 2023.

“We also would not rule out a 75 bp hike in either July or September in the event of more acute ZAR weakness,” Schultz added.

Oil prices

Global oil prices have remained high at around $120 a barrel, with experts doubtful that they will subside any time soon.

Oil prices have been under significant pressure since Russia’s invasion of Ukraine in February 2022, which brought about a slew of sanctions against the Kremlin – including bans on Russian oil and gas within the European Union.

As the war in Ukraine continues unabated, the sanctions are not going anywhere – while global demand has increased as industries return to work following two years of Covid-19 lockdowns.

China, which is coming back from its most recent Covid-19 outbreak, has significantly increased demand – but capacity is severely stunted.

“I’ve never seen this combination of circumstances in my career over the last 50 years,” Gary Ross a veteran oil consultant turned hedge fund manager at Black Gold Investors told Bloomberg. “The world has very little spare capacity, the economy is strong outside of China, China is now coming back and we’re in the midst of a global oil interruption.”

This is how the price changes will reflect at the pumps:

Inland June official July expected
95 Petrol R24.17 R26.20
93 Petrol R23.94 R25.80
0.05% diesel (wholesale) R23.09 R24.37
0.005% diesel (wholesale) R23.23 R24.51
Illuminating Paraffin R18.20 R19.73
Coastal June official July expected
95 Petrol R23.52 R25.55
93 Petrol R23.29 R25.15
0.05% diesel (wholesale) R22.44 R23.72
0.005% diesel (wholesale) R22.59 R23.87
Illuminating Paraffin R17.49 R19.02

Read: ‘Set your own petrol price’ – and other alternatives proposed for South Africa’s record-high fuel costs

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