Here is the expected petrol price for March

Mid-month data from the Central Energy Fund (CEF) points to pain at the pumps in March 2023 for both diesel and petrol drivers in South Africa.

The snapshot data for 14 February 2023 shows an under-recovery for petrol and diesel, indicating a price increase of up to R1.26 per litre and 38 cents per litre, respectively.

These are the expected changes:

• Petrol 93: increase of 126 cents a litre;
• Petrol 95: increase of 120 cents a litre;
• Diesel 0.05%: increase 37 cents a litre;
• Diesel 0.005%: increase of 38 cents a litre;
• Illuminating paraffin: increase of 41 cents a 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. Ultimately, the expected price changes are contingent on current market conditions persisting through the end of the month.

As was seen in February, market conditions at the start of the month – pointing to a price drop – were completely reversed by the end of the month, where a price increase was ultimately implemented.

Local fuel price fluctuations are impacted by two main factors – the international price of petroleum products, driven mainly by oil prices, and the rand/dollar exchange rate used to purchase these products.

In the first two weeks of February, both oil prices and the rand have been working against motorists, with both factors contributing to an overall under-recovery in fuel prices. Oil prices, which contribute to the movement in international product prices have gradually started rising, while the rand has weakened significantly against the dollar.

Oil prices

Global oil markets have been volatile in recent months – and this volatility has continued into February.

Oil prices rose at the end of January as markets anticipated tighter supply due to China ending its zero-Covid policy and reigniting its economy, along with constraints from sanctions on Russian oil and a concerted move from OPEC+ nations to cut production.

However, these concerns were eased as markets bade their time to see whether these scenarios would actually play out. This kept oil prices in a relatively stable range, not pushing too far above $87 a barrel.

Industry analysts still anticipate that prices will rise – possibly over $90 or $100 a barrel – in the future, but expect it will stay range-bound in the near term.

More recently, Bloomberg analysts pointed to oil prices weakening over the short term, with US oil producers building inventories. However, several disruptive forces are still at play, including the ongoing Russian war against Ukraine.

Oil is currently trading at around $85 a barrel.

Rand exchange

The rand’s weakness against the dollar is keeping pressure on local fuel prices – contributing to an even bigger under-recovery for diesel than the oil price.

The local unit is currently taking a beating from both global conditions – such as a stronger dollar – as well as local failings, like the ongoing power crisis and political uncertainty tied to president Cyril Ramaphosa.

On the global front, higher-than-expected inflation numbers from the United States have led to a bearing outlook for interest rates in the world’s biggest economy. This has created a risk-off environment, weakening emerging market currencies like the rand.

Local struggles, however, have exacerbated the issue. South Africa is currently experiencing the worst levels of load shedding on record, having had rolling blackouts hit every single day of the year so far, and continuing for over 100 days consecutively.

President Cyril Ramaphosa attempted to allay fears and concerns around the power crisis in his state of the national address. Unfortunately, market response to the address was flat, with investors unconvinced by the president’s plans.

The rand is currently trading close to R18.00 to the dollar, having passed that mark during the week.

This is how the expected price changes could reflect at the pumps:

Read: Big jump in petrol prices expected for March