R3.65 per litre petrol pain for South Africa

South Africa’s petrol prices have yet to recover from the geopolitical tensions in the west, while the performance of the rand also had a part to play, with South Africans taking an almost R4.00 per litre hit since Russia invaded Ukraine.
In February 2022, Russia invaded Ukraine in a major escalation of the Russo-Ukrainian War, which started in 2014.
The invasion has been described as the largest conflict in Europe since World War II, and it had a massive impact on the world’s Brent crude oil prices.
As the second largest oil producer globally, Russia’s war with Ukraine and its chain of events have significantly impacted the world energy market.
A study published by ShanghaiTech University showed that the Russia–Ukraine war resulted in a 73.62% change in Brent crude oil price.
The study further demonstrated that the Russia–Ukraine war has significantly impacted the crude oil market, fundamentally altering its long-term trend in oil prices.
The sticky oil prices, as a result, have materially impacted the price of fuel in South Africa.
The main culprit behind the pressure on fuel prices in South Africa is the global oil price.
Oil prices have remained solidly higher for the year so far, thanks to oil-producing nations (OPEC+) curbing supply and stronger fuel demand over the Northern Hemisphere summer.
In 2022, the war caused the price of oil to increase by just over 19% in South Africa.
The war also hit other commodity prices. Russia and Ukraine account for a significant proportion of global maize and wheat production, risking South Africa’s maize futures.
Additionally, export commodity prices are trending higher than before the conflict, while the global inflation spike stoked by the war is still being felt.
Forward to July 2024, the increase in oil prices and its impact on local prices have been relatively maintained.
The Minister of Mineral Resources and Energy, Mr Gwede Mantashe, noted that the market was very volatile as recently as May 2024.
“The main contributing factor is continued geopolitical tensions and sustained production cuts by OPEC+ countries,” he said.
Petrol prices before the war (R19.61) and today (R23.26) show an increase of 18.6%, only moderated recently by two consecutive drops in petrol prices over the past two months.
Diesel is worse, increasing 21% from R17.28 per litre to R20.91, despite the recent relief for diesel users over 2024 so far.
This increase, pressured by the global oil prices, could’ve been worse if it had not been for the recent rally of the rand in response to the South African election results.
The rand managed to push under R18.00 in the first half of July, with local markets boosted by more certainty in governance through the Government of National Unity (GNU) as well as positive statements pointing to the start of global and local interest rate cuts.
Despite some positives, the rand still shares some of the blame for stubborn petrol prices.
Over the same period (when the war started to now), the rand was weakened from R15.24/dollar to R18.09/dollar, representing a depreciation of 18.7%.
As a result of the continuing local and global economic volatility, South African motorists are paying R3.65 more per litre than they were before the war began, thanks to the impacted Brent crude oil price and the rand’s performance.
To illustrate the cost of this increase, BusinessTech compared how much more you’re paying depending on your car.
The average petrol tank size for the top-selling vehicles in South Africa is 60.4 litres.
This means the typical South African motorist is paying R220 more if they fill up their vehicle with Petrol 95 today compared to pre-war January 2022.
The table below shows how much more car owners in South Africa pay every time they fill up with 95 unleaded petrol, based on their car type and tank size, since the start of the Russian and Ukrainian war.
The changes are detailed in the table below.
Car type | Avg. tank size | Pre-war price (January 2022) | Post-war price (July 2024) | Difference |
---|---|---|---|---|
Bakkie | 79 litres | R1,549.20 | R1,837.54 | +R288 |
SUV | 65 litres | R1,274.65 | R1,511.90 | +R237 |
MPV | 56 litres | R1,098.16 | R1,302.56 | +R204 |
Sedan | 52 litres | R1,019.72 | R1,209.52 | +R190 |
Crossover | 47 litres | R921.67 | R1,093.22 | +R172 |
Hatchback | 39 litres | R764.79 | R907.14 | +R142 |