R2.40 petrol price relief for South Africa
South African motorists have experienced three consecutive months of petrol price cuts, almost reverting back to the prices at the start of the year by dropping an accumulative R2.38 since May.
On Monday (5 August), the Department of Petroleum and Mineral Resources noted that motorists would see another cut at the pumps this month, with prices coming down by 15 cents per litre for petrol and between 17 and 28 cents per litre for diesel.
This welcome relief is largely attributed to range-bound oil prices and a stronger rand/dollar exchange rate, partly a consequence of the optimism surrounding the newly established Government of National Unity.
The new government’s political stability and positive economic outlook have bolstered investor confidence, strengthening the rand against the dollar over the last four months.
A stronger local currency makes importing fuel cheaper, allowing for reduced prices at the pump.
The Department of Petroleum and Mineral Resources reported that the average price of Brent Crude oil rose from $82.24 to $83.55 per barrel during the review period.
This increase was primarily due to a decrease in US inventories, reduced production from Canada because of wildfires, tensions in the Middle East, and ongoing production cuts by OPEC.
Additionally, the average international prices for petrol increased slightly due to improved summer seasonal demand in the Northern Hemisphere, while diesel and illuminating paraffin prices decreased on average during the review period.
Despite this, prices have fallen to R23.11 for petrol and R20.74 for diesel as of August.
Petrol prices have dropped by R2.38 per litre from R25.49 per litre in May, and diesel by R1.88 per litre from R22.62 per litre in March.
This relief is substantial, as it has almost completely reversed most of the 2024 petrol price increases, which stood at R3 per litre from January to May 2024.
This is also true for diesel, as diesel price increases hit R2 per litre in March, the highest since the start of the year.
Despite this positive development, it is essential to note that South Africa’s fuel prices remain vulnerable to global crude oil prices and exchange rate fluctuations.
The international oil market is inherently volatile, influenced by geopolitical tensions, supply chain disruptions, and changes in production levels by major oil-producing countries.
These factors can lead to abrupt changes in crude oil prices, directly impacting fuel costs in South Africa.
Furthermore, while the stronger rand provides temporary relief, it is not immune to depreciation.
This was noted on Monday (5 August) as the rand and the JSE followed global markets down on Monday (5 August) after job numbers from the United States spooked investors and analysts.
The rand crumbled close to 2% in trade on Monday, hitting close to R18.70 to the dollar in intraday trade.
This was a result of the extension of last week’s losses amid fears of a US economic slowdown, and the rand kicked off the week on the back foot as investors pulled out of high-risk markets into safe havens.
Any future weakening of the rand against the dollar would likely result in higher fuel prices again.
Therefore, while the current reduction in fuel prices is a significant respite for consumers and businesses alike, it is crucial to remain cautious and prepared for potential price volatility.
To illustrate the relief in real terms, 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 average South African driver saves R144 per tank by filling up with petrol 95 today compared to May (the peak of the price increases).
The table below shows how much more car owners in South Africa have paid every time they fill up with 95 unleaded petrol, based on their car type and tank size, since the fuel price-cutting cycle started.
The changes are detailed in the table below.
| Car | Avg. tank size | May 2024 | August 2024 | Saving per tank |
|---|---|---|---|---|
| Bakkie | 79 litres | R2,013.71 | R1,825.69 | -R188 |
| SUV | 65 litres | R1,656.85 | R1,502.15 | -R155 |
| MPV | 56 litres | R1,427.44 | R1,294.16 | -R133 |
| Sedan | 52 litres | R1,325.48 | R1,201.72 | -R124 |
| Crossover | 47 litres | R1,198.03 | R1,086.17 | -R112 |
| Hatchback | 39 litres | R994.11 | R901.29 | -R93 |
Read: Big storm brewing over Eskom price hikes in South Africa
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