Energy

Trouble for petrol prices in August

Staff Writer

 ·10 Jul 2026

The sharp over-recoveries in fuel prices at the start of the month are diminishing, while renewed escalations between the United States and Iran pose a significant risk to the numbers in the weeks ahead.

The latest recovery data from the Central Energy Fund (CEF) shows that fuel price recoveries have almost halved since the start of the month.

Starting at an over-recovery of R2.50 per litre at the start of July, it has since reduced to about R1.60 per litre.

Diesel’s over-recovery has reduced from around R3.50 per litre to about R1.60 per litre.

The good news is that recoveries are still positive, lining motorists up for a cut at the pumps in August—but the trend line is moving in the wrong direction and risks deteriorating further.

These are the recoveries at the end of the week:

• Petrol 93: decrease of R1.63 per litre
• Petrol 95: decrease of R1.62 per litre
• Diesel 0.05% (wholesale): decrease of R1.29 per litre
• Diesel 0.005% (wholesale): decrease of R1.61 per litre
• Illuminating paraffin: decrease of R1.59 per litre

The large over-recovery at the start of the month reflected the steep drop in global oil prices, which approached pre-war levels of $70 a barrel.

The drop in prices was due to market optimism and confidence that the US-Iran war was drawing to a close as both countries signed a memorandum of understanding to end battles and reopen the Strait of Hormuz.

The countries were also set to meet and negotiate a longer-term end to the war.

However, US President Donald Trump announced this week that the negotiations were over, and bombings began again, re-escalating the conflict.

As a result, oil prices started rising once again—though not as sharply as they had at the onset of the war in late February.

Nevertheless, the flare-up in fighting drove a steep drop in traffic through the Strait of Hormuz. Oil has ended the week steadier as talks between the US and Iran continued, despite the escalation.

“The market appears to be viewing the latest US-Iran tensions as a challenge to the ceasefire process rather than a complete collapse,” said Warren Patterson, head of commodities strategy for ING Groep NV in Singapore.

“Reports of continued talks between Washington and Tehran are also helping to reassure the market that diplomacy remains the preferred path.”

Rising oil prices, reducing the over-recovery, is a significant setback in getting local fuel prices back to pre-war levels.

Despite the trend in recent months (June for petrol and June and July for diesel) of fuel prices seeing steep cuts, they are still some way off from the levels at the start of the year.

Petrol prices are still currently R6.00 per litre higher than before the war, and diesel prices are still R7.22 per litre higher.

If the current projections for August hold, prices will make another big move towards pre-war levels, but would still be between R4.40 and R5.60 per litre higher than in February.

Post-Iran War price adjustments

Rand could go either way

As it currently stands, the global oil prices are the main contributor to the big swings in fuel price recoveries. However, the rand is also a factor.

The rand has remained fairly resilient throughout the US-Iran war, largely taking direction from global developments, tempered with local moves—such as the South African Reserve Bank’s decision to hike rates.

The rand was trading under R16/$ pre-War, and buckled towards R17/$ at the onset of the fighting. However, it remained within a relatively tight range around R16.50/$ in the months that followed.

Once a ceasefire had been declared, the rand strengthened to below R16.20/$—and when fighting reignited, it headed toward R16.40/$.

Following the re-escalation of the conflict in the Middle East, the rand weakened, along with other emerging-market currencies, as sentiment turned risk-off.

But a weakening dollar has seen the unit pull back to around R16.30 on Friday (10 July).

“Heading into the weekend, and with little in the way of data to look forward to, most of the direction will come from developments in the Middle East, the performance of global equity markets and broader risk appetite,” ETM Analytics said in a note.

For fuel prices, the rand is currently contributing to an over-recovery, but only marginally (around 2 cents per litre).

Fluctuations in the exchange rate are likely to keep it around the neutral level, either helping or hindering to a small extent, depending on market whims.

The main factor that will determine how quickly South Africa returns to pre-war fuel prices is the shift in global oil prices.