Bad news about petrol prices in September just got worse
Fuel price recoveries at the end of the third week in August have almost completely erased the gains from the last few weeks, with motorists facing a significant petrol and diesel price hike in September.
According to the latest data from the Central Energy Fund (CEF), fuel price recoveries have moved back to the steep under-recoveries seen at the start of the month.
Petrol prices started in August with an under-recovery of R1 per litre. By mid-month, this had reduced to around 65 cents per litre—but now they are back to 94 cents per litre.
For diesel, the same story is unfolding.
After starting the month at an under-recovery of R5 per litre, mid-month showed a significant reduction to around R2.80 per litre. Under-recoveries are now back up to R3 per litre.
These are the recoveries at the end of week three:
- Petrol 93: increase of R0.83 per litre
- Petrol 95: increase of R0.94 per litre
- Diesel 0.05% (wholesale): increase of R2.87 per litre
- Diesel 0.005% (wholesale): increase of R3.07 per litre
- Illuminating paraffin: increase of R2.24 per litre
The reversal in the recovery path is due to the ongoing war between the United States and Iran in the Middle East.
After moving towards a peaceful resolution at the end of June 2026, the war reignited in mid-July when peace talks collapsed.
Since then, Iran has shut the Strait of Hormuz, exchanging fire with the United States’ naval blockage.
Before the war reignited, global oil prices were heading to below $70 a barrel as shipping started to pick up through the Strait.
However, as the passageway shut down, oil pushed toward $100 a barrel again.
Some ships have managed to move through the Strait, which tempered some of the shock and kept prices in a range of $80-$90 a barrel for weeks.
Prices shot up past these levels—now trading at close to $94 a barrel—as the Trump Administration prepares for its next economic salvo, which could include sanctions.
According to Bloomberg, the administration is expected to give details of an “economic D-day” initiative next week that would target Iran.
However, it could also ensnare countries that deal with the Islamic Republic, possibly including China.
The risk of getting embroiled in another economic war with Beijing—by far the largest importer of Iranian oil—has spurred further uncertainty and turmoil in global markets.
Meanwhile, the economic impact of the war continues to reverberate throughout the world, including South Africa.
Saving grace
The one saving grace for local fuel price recoveries has been the rand—but not enough to significantly offset the impact of global oil prices.
While higher oil prices are contributing the bulk of the under-recovery, at R1 and R3 per litre for petrol and diesel, respectively, the rand is cutting this back by 13-19 cents per litre due to its strength.
The rand is currently trading at R16.05 to the dollar, testing the R16/$ resistance level it last broke through before the US-Iran war.
The local unit has had an extremely resilient year, reversing losses seen at the outbreak of the war and largely shrugging off market volatility since then.
The rand got a huge boost this week from the minutes of the US Federal Reserve’s Open Market Committee (FOMC) meeting, which expressed concern over inflation and upside risks.
This, in turn, has led markets to price out future rate hikes in the US this year, weakening the dollar and strengthening the rand.
The stronger currency is also being supported by firmer local economic fundamentals and a boost from commodities, with gold prices edging higher and remaining on course for a third weekly gain.
Despite the stronger rand, the under-recovery from oil is overwhelming, with no reversal in sight.
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