Energy

R2.70 per litre relief for petrol prices in South Africa

Staff Writer

 ·8 Apr 2026

The dramatic turn in markets, thanks to a two-week ceasefire between the United States and Iran, has cut global oil prices by $17 a barrel, which should shave R2.70 per litre off the fuel price hikes building for May.

According to Aluma Capital Chief Economist Frederick Mitchell, the turn in oil prices is the relief markets have been waiting for, breaking the “perfect storm” that has been gathering around energy costs.

“The perfect storm of rising energy costs and currency volatility that has dogged the South African outlook for weeks has finally begun to break,” he said.

“Following the overnight announcement of a two-week ceasefire in the Middle East, global markets have undergone a radical correction, providing a much-needed ‘pressure release valve’ for the domestic economy.”

Mitchell noted that the primary catalyst for the shift is the “rapid evaporation” of the war premium on oil.

Global oil prices were around $111 a barrel before the ceasefire agreement and dropped almost instantly to around $94 a barrel once it was announced. This $17 drop reflected the building tensions around the war.

For South Africa, the relief will be palpable, Mitchell said.

“For South African consumers and the logistics sector, this is the breakthrough we have been waiting for,” he said.

“Our fuel prices are directly pegged to international refined product costs via the Basic Fuel Price. This $17 correction alone provides a daily relief of approximately 212 cents per litre.”

The good news continues with the resultant rand strength.

The rand has been remarkably resilient even in the face of the war, but it, too, immediately strengthened as markets breathed a sigh of relief on the ceasefire.

Now trading at approximately R16.42/$—down from recent highs of R16.95—the local currency has capitalised on a global ‘risk-on’ sentiment following the ceasefire, Mitchell said.

“As a net importer of fuel, South Africa benefits doubly when the Rand strengthens against the Greenback,” he noted.

“The currency’s current stance provides an additional 58c/l cushion of downward pressure on the under-recovery. When paired with the oil price drop, we are seeing a total daily swing of R2.71 in relief.“

There’s a big catch

While the data has an undeniably positive impact on fuel prices in South Africa, it comes with the caveat that the disruptions from the war have already been baked into May prices.

The latest data from the Central Energy Fund (for 7 April, before the ceasefire) shows massive under-recoveries for petrol and diesel at R4.40 and R12.50 per litre, respectively.

This means that the ceasefire is likely to only soften the blow for May, not reverse it entirely.

“Because the high prices from the first week of April are already baked in, this ceasefire prevents a catastrophe rather than guaranteeing an immediate price drop at the pumps,” Mitchell said.

Another huge caveat is the R3.00 per litre tax relief delivered by the National Treasury for April—and only April—which may be added back to prices in May.

According to Mitchell, this will be the “real test”, as adding back the R3.00 per litre in taxes will completely undo the relief from the ceasefire.

“Even with the global reprieve, the reinstatement of this tax remains a significant hurdle for inflation management,” he said.

Other market analysts have also warned that the positive news is only good for as long as the ceasefire holds, and whether it can translate into a longer-term deal for stability in the Middle East.

The DeVere Group’s Nigel Green noted that, should the deal fall through, markets could again tank just as quickly as they pulled back.