Big petrol price cut coming next week

South African motorists can look forward to a sizeable cut to petrol and diesel prices next week, with data showing that over-recoveries have stuck it out to the end of the month.

Month-end data from the Central Energy Fund (CEF) is showing a significant over-recovery in both petrol and diesel prices.

Petrol prices should be coming down by between 64 and 78 cents per litre, while diesel should be cut by around 90 cents per litre.

This is before factoring in any tax changes that will kick into effect from 1 April.

While Finance Minsiter Enoch Godongwana froze the general fuel and Road Accident Fund levies for 2025, the carbon fuel levy will be increasing by 3 cents per litre.

This will ultimately counter the price cuts very slightly.

Here are the projected changes based on month-end data:

• Petrol 93: decrease of 64 cents per litre
• Petrol 95: decrease of 78 cents per litre
• Diesel 0.05% (wholesale): decrease of 90 cents per litre
• Diesel 0.005% (wholesale): decrease of 93 cents per litre
• Illuminating paraffin: decrease of 84 cents per litre

The recoveries aren’t that different from projections earlier in the month, meaning the positive market conditions regarding oil prices and the rand/dollar exchange rate have remained fairly stable.

Movements in oil prices have been the biggest driver of the over-recoveries, with crude oil prices remaining weaker overall.

While oil prices have started climbing—now trading around $73 a barrel, up from under $70 a barrel earlier in the month—they are still lower relatively to last month.

Oil prices have been under pressure due to wider global market uncertainty as traders wait and see what will happen with US president Donald Trump’s tariff and trade war.

Bloomberg analysis of the market shows that oil has trended higher as investors weigh the disruption to supply caused by President Donald Trump’s sanctions and levies.

Traders are snapping up bullish options to hedge against price spikes, it said.

The potential hit to crude flows as a result of the US has been tempered by concerns over softer demand and rising supply, with top trading houses bearish on crude prices over the rest of the year.

Next month, oil-producing nations are scheduled to start reviving idled production. This is the first in a series of planned hikes, which will boost supply and likely lower prices.

As a result, oil prices have been low for March, benefitting local recoveries and aiding in some good news for motorists in South Africa next week.

What is shaking up the rand

The other side of the equation—the rand/dollar exchange rate—has also been good for motorists.

While the rand is by no means strong—trading around R18.20/$ and still quite a way off from its fair value—it has shrugged off many local troubles like the return of load shedding and uncertainty around the 2025 budget.

Instead, it has been at the whims of the global market along with other emerging market currencies.

According to Investec chief economist Annabel Bishop, the global financial market focus remains on the United States, with the rand mainly impacted by global events.

The United States is “severely influencing” sentiment on high uncertainty around Trump’s tariff regime, she said, as the situation remains fluid on US protectionism.

Bishop said that volatility around the Trump trade war will likely keep markets in risk-off mode, which is bad news for the rand.

However, if things end up being not as bad as expected, this could lead to risk-taking, which would boost the local unit.

These uncertainties are being tempered by at least more stability on interest rates, with the Reserve Bank following the US Fed in holding rates last week.

Holding rates keeps the differential between the two countries firm—a positive for the rand—while lower inflation locally means there is still room to cut later.

However, Bishop said that much will depend on tariff announcements in the US, both in April and over the Trump administration’s full term.

“The risks that heavy tariffs in the US hold for global and US economic growth, as well as inflation—and so interest rate outcomes—affect investor sentiment markedly,” she said.

This feeds into emerging markets like South Africa, and their economies and currencies.

As it stands, Bishop said the rand is expected to average closer to R18.00/USD in the second quarter of the year, lower than the first quarter’s R18.50/USD outcome.

The rand could strengthen later in the year but will also experience volatility, she said.

“The materialisation of US interest cuts this year is key for the rand’s outlook,” she said.

For now, the rand’s relative stability is contributing positively to fuel price recoveries, adding to the likely fuel price cuts coming next week.

The Department of Petroleum and Mineral Resources will publish the official price changes sometime before the come into effect from Wedensday, 2 April 2025.