R4.62 petrol price relief for South Africa

South African motorists are lined up for more petrol price relief in October, with the latest data from the Central Energy Fund (CEF) showing a more than R1.00 per litre over-recovery for both petrol and diesel.

Should this expected price cut come through next week, this would be a massive R4.60 cut in petrol prices since October 2023.

2024 has been a remarkably good year for fuel prices, with year-on-year reductions showing a massive decline over the past 12 months.

In October 2023, petrol 95 prices were at a crazy high of R25.68 per litre, while diesel (0.05%) was sitting at R25.02.

One year later—October 2024—the expected price cuts would put the year-on-year cost reduction at as much as R4.62 per litre for petrol and an even bigger R6.63 per litre for diesel.

Year-to-date changes

A significant portion of the price cuts have come in 2024.

The coming petrol price cut will be the fifth consecutive cut in prices for petrol since May, and the sixth for diesel.

Petrol prices in January started at R23.25 per litre for petrol (95) and R21.82 per litre for diesel (0.05%) before the first fuel price changes for the year kicked in.

Should the current over-recovery lead to proportional cuts, prices in October should be around R21.06 per litre—a net reduction of around R2.19 per litre).

The to-date reduction in diesel prices for 2024 is even better, with a net reduction of R3.34 per litre.

The big reductions in fuel prices can be attributed to a much weaker oil price in 2024, which has been driven by economic slowdowns in global markets and the failure of oil-producing nations (OPEC) to effectively counter this.

Crude remains modestly lower this year after the dour outlook in China’s economy and the prospect of higher supply from OPEC and its allies weighed on prices.

The rand has generally been supportive in the month-to-month recovery calculations, but the currency is generally weaker against the US dollar compared to last year.

While the unit is trading stronger, off the back of more positive sentiment around the Government of National Unity, some progressive reforms and the end of load shedding for the time being, it is still some way off from its fair value circa R15.00/$, and unlikely to reach that any time soon.

According to Old Mutual Wealth Investment Strategist, Izak Odendaal, South African motorists have more to look forward to.

In a note this week, he said that lower il prices—and thus lower local fuel prices—have been a key driver of lower inflation, and this is something the South African Reserve Bank is paying attention to when it comes to setting interest rates.

On top of the lower global oil price, which has declined from a 2024 peak of $94 per barrel to $74, the firmer rand will lead to more petrol price cuts for motorists, he said—which means even better news for inflation.

“While petrol inflation was still positive in the August CPI report at 1.7% year-on-year, the October report will reflect two more rounds of fuel price cuts, taking petrol inflation down to around -20% year-on-year.

“Since petrol is 5% of the overall basket, this will subtract around one percentage point from overall inflation, which was at a three-year low of 4.4% in August,” he said.

BusinessTech will publish its month-end analysis of petrol prices later this week, ahead of The Department of Petroleum and Mineral Resources’ announcement of official changes.

The changes will kick in from Wednesday, 2 October.

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