Diesel price recoveries in South Africa have fully swung into the red, with the negatives deepening as the war between the United States and Iran continues.<\/p>\n\n\n\n
According to data from the Central Energy Fund for the new week, diesel price recoveries have swung to an under-recovery for both Diesel 0.05% and Diesel 0.005%.<\/p>\n\n\n\n
This comes from a downward trend last week, where Diesel 0.005% recoveries hit a neutral level.<\/p>\n\n\n\n
Diesel recoveries are being hit from both ends, with the war in the Middle East shutting down the Strait of Hormuz yet again\u2014sending oil prices soaring\u2014and shortages out of Russia.<\/p>\n\n\n\n
Chief investment strategist at Symmetry, Izak Odendaal, warned last week that despite mid-month over-recoveries in diesel prices, the fuel would push into negative territory because of the war.<\/p>\n\n\n\n
The over-recovery of around 30 cents per litre would be overwhelmed by the daily under-recovery of around R3.73 per litre tied to the conflict, he said.<\/p>\n\n\n\n
Similar warnings were echoed by Frank Blackmore, Lead Economist at KPMG South Africa, who noted that a break in the ceasefire in the Strait of Hormuz would lead to further price increases.<\/p>\n\n\n\n
“It can be that over recovery is absorbed between now and the end of the month when prices are set,” he said.<\/p>\n\n\n\n
This has now come to be.<\/p>\n\n\n\n
The CEF’s data for the start of the week shows that diesel is now sitting at an under-recovery of between 22 and 45 cents per litre\u2014pointing to more price hikes on the way.<\/p>\n\n\n\n
As a consolation, petrol recoveries are still in the positive, with an over-recovery between 79 and 83 cents per litre, but even this is slipping, with the positives gradually receding.<\/p>\n\n\n\n
These are the recoveries at the end of the week:<\/p>\n\n\n\n
This is how recoveries have shifted this month-to-date (MTD):<\/p>\n\n\n\n A smaller cut in petrol and a possible hike in diesel will also slow or stem the recovery in prices toward pre-war levels.<\/p>\n\n\n\n As things stand, petrol prices are still R6 per litre higher than when the war began, with diesel prices more than R7 per litre higher.<\/p>\n\n\n\n At current recovery levels, the projected August changes would hardly make a dent.<\/p>\n\n\n\n This, in turn, will add pressure on inflation in the country as industry, businesses, and consumers all bear the higher costs of fuel and other increases along the supply chain.<\/p>\n\n\n\n It will also play into the South African Reserve Bank’s assessment of markets and the economy when determining its interest rate moves.<\/p>\n\n\n\n The SARB’s Monetary Policy Committee is meeting this week and will announce its next policy move on Thursday (23 July).<\/p>\n\n\n\n According to KPMG’s Frank Blackmore, the assumption would have been to keep rates steady, given the fact that under the previous ceasefire conditions, oil prices were falling. <\/p>\n\n\n\n However, with the reignition of the war, and higher oil prices following, the SARB “will have to look at if the impact over a prolonged period of time requires an additional increase in the policy rate”.<\/p>\n\n\n\n Economists were generally split between the SARB holding rates and hiking by another 25 basis points. As the war continues, the position has increasingly shifted to anticipating the hike.<\/p>\n\n\n\n Diesel price recoveries in South Africa have fully swung into the red, and petrol’s positives are shrinking as the war between the United States and Iran continues.<\/p>\n","protected":false},"author":10,"featured_media":796944,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2079465410055811206","_sma_x_attempts":1,"footnotes":""},"categories":[9874],"tags":[19909,2922,2171],"class_list":["post-866934","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","tag-diesel-price","tag-interest-rates","tag-petrol-price"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866934","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=866934"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866934\/revisions"}],"predecessor-version":[{"id":866939,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866934\/revisions\/866939"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/796944"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=866934"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=866934"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=866934"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Fuel<\/th> July starting over<\/mark>(under) <\/mark>recovery<\/th> Current over<\/mark>(under) <\/mark>recovery<\/th> MTD Change<\/th><\/tr><\/thead> Petrol 93<\/td> R2.50<\/mark><\/td> R0.83<\/mark><\/td> (R1.67)<\/mark><\/td><\/tr> Petrol 95<\/td> R2.50<\/mark><\/td> R0.79<\/mark><\/td> (R1.71)<\/mark><\/td><\/tr> Diesel 0.05%<\/td> R3.07<\/mark><\/td> (R0.45)<\/mark><\/td> (R3.52)<\/mark><\/td><\/tr> Diesel 0.005%<\/td> R3.51<\/mark><\/td> (R0.22)<\/mark><\/mark><\/td> (R3.73)<\/mark><\/td><\/tr> Illuminating Paraffin<\/td> R3.43<\/mark><\/td> (R0.21)<\/mark><\/mark><\/td> (R3.64)<\/mark><\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n Post-Iran War price adjustments<\/h2>\n\n\n\n
Month<\/th> Petrol 95<\/th> Diesel 0.005%<\/th><\/tr><\/thead> March<\/td> +R0.20<\/mark><\/td> +R0.65<\/mark><\/td><\/tr> April<\/td> +R3.06<\/mark><\/td> +R7.51<\/mark><\/td><\/tr> May<\/td> +R3.27<\/mark><\/td> +R5.27<\/mark><\/td><\/tr> June<\/td> +R1.43<\/mark><\/td> -R2.62<\/mark><\/td><\/tr> July<\/td> -R1.96<\/mark><\/td> -R3.59<\/mark><\/td><\/tr> Total difference<\/strong><\/td> +R6.00<\/strong><\/td> +R7.22<\/strong><\/td><\/tr> August (current recovery)<\/em><\/td> -R0.79<\/em><\/mark><\/td> +R0.22<\/mark><\/em><\/mark><\/td><\/tr> Projected difference<\/em><\/strong><\/td> +R5.21<\/em><\/strong><\/td> +R7.44<\/em><\/strong><\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n
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