R2 petrol price joy for South Africa

As South Africans prepare for the festive season, there’s some welcome news for motorists as fuel prices are expected to be notably lower than last year’s—despite the increase in November and the small increase set for December..

Forecasts indicate that in December 2024, petrol prices will be more than R2 lower per litre than in December 2023, with diesel prices anticipated to be almost R3 less.

This reduction is a relief for those planning to travel over the holidays, promising some financial relief amidst rising holiday expenses.

This trend of declining fuel prices has been building up over the year, marked by moderate price adjustments, but the overall trajectory has been favourable for South African consumers.

Data from the Central Energy Fund (CEF) for December showed small price gains in certain fuels, like 93 octane petrol, which transitioned from an under-recovery of close to 10 cents per litre early in October to a slight over-recovery of 5 cents per litre by the month’s end.

These marginal adjustments showcase the influence of international oil prices and currency fluctuations on local fuel costs.

For example, after a period of volatility surrounding the U.S. presidential election, the rand stabilised somewhat, and the pressure on fuel prices eased.

The South African currency, though stronger in recent months, remains weaker overall against the U.S. dollar compared to last year.

Encouraging developments in South Africa, including progressive policy reforms, the Government of National Unity, and the end of load shedding, have provided some support for the rand, but it still lingers far from what analysts consider its fair value of around R15 per dollar.

One major contributor to fuel price reductions has been the weaker oil prices seen throughout 2024.

Global markets have been slowed by economic challenges, particularly in China, while oil-producing nations, including OPEC, have struggled to curtail production effectively enough to counteract the drop in demand.

As a result, crude oil prices, which peaked at around $94 per barrel earlier this year, have now fallen closer to $74, benefiting consumers with lower fuel costs at the pump.

For South African motorists, these changes translate into significant savings.

In December 2023, the price for 95-octane petrol was R23.25 per litre, and diesel (0.005%) cost R21.99.

Fast forward a year, and anticipated prices for December 2024 are R21.35 for petrol and R19.27 for diesel—showing a reduction of about R2 for petrol and R2.70 for diesel per litre.

These savings are even more pronounced when filling up a tank.

An analysis by BusinessTech using the top-selling vehicles in South Africa, which have an average tank size of 60.4 litres, reveals that the average motorist could save approximately R115 on petrol and R164 on diesel per tank compared to last year.

Old Mutual Wealth Investment Strategist Izak Odendaal highlights that lower oil prices, and consequently lower fuel prices, have played a vital role in keeping inflation in check this year.

This effect has not gone unnoticed by the South African Reserve Bank, which takes fuel prices into account when setting interest rates.

For many South African households, lower fuel prices help alleviate the financial strain, particularly during a period where travel and holiday expenses tend to surge.

Motorists can look forward to the final official petrol price announcement from the CEF at the end of November, but the outlook is promising.

Lower fuel costs are anticipated to provide a small but significant boost to South Africans gearing up for holiday travel, making their festive season journeys a little more affordable.

Read: Positive turn for petrol prices in South Africa – but with a big catch