Bad news about petrol prices in March
Fuel price recoveries have deteriorated in the third week of February, making petrol price cuts in March increasingly less likely.
While diesel prices have shown an underrecovery for much of the month—all but cementing a hike in March—petrol price recoveries have been skirting the edge.
Fluctuating between and under- and over-recovery of a few cents per litre (cpl), data from Central Energy Fund (CEF) for the third week of Feb shows the scales tipping deeper into the red.
According to the latest snapshot, petrol prices are showing an under-recovery of between 3 and 5 cpl, and contributing factors are deteriorating.
For diesel, the under-recovery has deepened to around 48 cpl, with little hope that the picture will flip by month-end.
These are the projected levels at the end of week 3:
- Petrol 93: increase of 3 cents per litre
- Petrol 95: increase of 5 cents per litre
- Diesel 0.05% (wholesale): increase of 46 cents per litre
- Diesel 0.005% (wholesale): increase of 49 cents per litre
- Illuminating paraffin: increase of 27 cents per litre
The rand is still contributing to an overall over-recovery in prices, helping to undercut the 20 to 68 cpl under-recovery from rising oil prices.
However, while still much stronger in relative terms, the rand has taken a turn for the worse this week after fresh signals from the United States suggested interest rates there could stay higher for longer.
Higher US interest rates typically attract global capital flows into dollar assets, leaving emerging-market currencies vulnerable.
This has given the dollar some strength, pushing the rand back above R16/$.
Even with the rand’s turn, the local unit is still much stronger overall relative to January, and its contribution to fuel price recoveries remains positive at +16-18 cpl.
The problem for motorists stems from oil prices, which have been trading higher in February, giving rise to base effects from low pricing over the past 12 months.
Oil prices rising
Oil prices rose to a six-month high this week, hitting close to $72 a barrel after United States President Donald Trump warned of possible military action against Iran.
Trump has given Iran 15 days at most to reach a deal over its nuclear program as the US assembles a vast array of forces in the Middle East.
According to Bloomberg, the looming war follows the United States’ biggest military buildup in the Middle East since 2003, before the invasion of Iraq.
“That suggests Trump may launch a far more sweeping campaign than the overnight attack against Iran’s nuclear program last June,” the media group said.
The president is also weighing a limited early strike aimed at driving Tehran to the negotiating table, the Wall Street Journal reported.
As a result, oil prices jumped 6% this past week, after slowly rising this year.
Trump said he thought 10 to 15 days were about the “maximum” he would allow for negotiations to continue, raising concerns about a conflict and potential disruptions to oil supply.
Pricing is being tempered by forecasters betting that Trump is looking to pile on pressure against Iran rather than “pull the trigger”.
However, Washington under the Trump administration has been incredibly unpredictable and volatile in international relations since it took office 12 months ago, leaving many doubts.
The impact of the geopolitical tensions is also being offset by ample oil supplies, with forecasters still anticipating a glut in 2026.
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