Here is the expected petrol price for March

Mid-month data from the Central Energy Fund points to more petrol and diesel pain in March, with both fuel types showing a massive under-recovery thanks to high oil prices and a weaker rand.

According to the CEF’s data, petrol prices are showing a potential increase of around R1.35 per litre lined up for March 2024, while diesel prices are set to go up between R1.40 to R1.60 per litre.

These are the expected changes:

• Petrol 93: increase of 135 cents per litre
• Petrol 95: increase of 131 cents per litre
• Diesel 0.05% (wholesale): increase of 143 cents per litre
• Diesel 0.005% (wholesale): increase of 159 cents per litre
• Illuminating paraffin: increase of 96 cents per litre

Daily snapshot data for LP Gas is not presented by the CEF.

The Department of Mineral Resources and Energy (DMRE) has noted that its daily snapshots are not predictive and do not encompass other possible modifications, such as slate levy adjustments or retail margin changes. The department determines these adjustments, considering various factors, at the end of the month.

Domestic fuel costs are primarily governed by the rand/dollar exchange rate and international oil prices. In South Africa, the fuel price is adjusted on the first Wednesday of every month based on these two factors.

For March 2024, higher oil prices have been working against motorists, while the weaker rand has also been adding a few cents to the under-recovery.

Rand

The rand has once again found itself on the wrong side of R19 to the dollar this week, trending weaker against the greenback since the start of the month.

According to Investec chief economist, Annabel Bishop, the local unit has been dragged down by multiple factors over the past week – headlined by a more “populist” State of the Nation Address from president Cyril Ramaphosa that was not well-received by markets.

While the SONA was generally a flub on many fronts, the lack of urgency to address the various crises in South Africa – instead focusing on electioneering and patting himself and his administration on the back – left markets wanting.

This has bled into wider uncertainty and anxiety around the coming national elections, which are set to be hotly contested and unprecedented, with the governing ANC expected to lose its outright majority for the first time since the dawn of democracy in South Africa.

These local issues are mixed in with global market movements, including signals from the US Federal Reserve that interest rate cuts are not coming any time soon – all working against the rand.

The rand’s weakness is currently contributing around 10 to 11 cents per litre to the under-recovery of fuel prices, trading at R19.12 to the dollar.

Oil

Global oil prices have been relatively stable in 2024 so far, but have trended upwards in the first half of February to trade at around $83 a barrel.

According to Bloomberg market analysis, while oil has struggled to break out of the $10 range it’s been confined to this year, recent runs point to upside momentum.

“Output cuts by members of the Organization of the Petroleum Exporting Countries and their allies, plus tensions in the Middle East, have supported prices. Still, higher ex-OPEC+ supplies and concerns about demand growth in China have restrained gains,” the group said.

Aside from the ongoing war between Israel and Hamas, further tensions in the Middle East have risen after US ships were attacked in the Red Sea, leading to retaliatory action.

Bishop noted that while OPEC+ has had some effect on pricing, year on year oil prices are still lower for crude. She said that, once again, rate cuts will be a key factor in pricing going forward.

“Markets continue to watch avidly for signals of the start of the US rate cut cycle, with May seeing only around a 30% chance of delivering a cut,” she said.

Nevertheless, oil remains the biggest contributor to local petrol and diesel woes, contributing the R1.20 to R1.50 per litre bulk of the under-recovery.

This is how the current expectations would reflect on fuel prices in March:

Read: Where petrol prices are headed in 2024