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Big diesel, petrol price hikes on the cards for October

19th September 2023

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Based on the current oil and rand prices, the latest data from the Central Energy Fund (CEF) shows that diesel prices may be hiked by around R2 a litre, depending on the grade. Petrol 95 and 93 unleaded could be increased by R1.23 a litre and R1.15c, respectively.

This will push fuel prices to levels last seen in July last year, the Automobile Association (AA) said.

However, there is still some time to go before the final prices are set. Fuel prices will only be adjusted on 4 October.

South African fuel prices are largely determined by international oil costs and the rand exchange rate, as oil is priced in dollars.

The CEF’s data is showing that in the case of petrol, up to 80% of the increase can be attributed to higher oil prices while these prices are responsible for up to 86% of the expected climb to the price of diesel, the AA said.

Brent oil is currently trading at around $94 a barrel, from $84 a month ago. The price of Brent crude oil has now climbed more than 30% since a recent low point in March. Saudi Arabia and Russia have cut their oil production, squeezing prices higher. Some analysts expect to see Brent to move above $100 a barrel soon.

The poorer rand/dollar exchange rand is contributing to the increases, but its impact, at the moment, is minimal compared to that of rising oil prices, it added. The rand has weakened from around R18.58/$ at the start of the month to R19/$ currently.

"The outlook is certainly bleak, although it has improved a little since the beginning of the month. With two more weeks before the official adjustment for October is made, South Africans will be hoping the downward trajectory continues. Although increases are now a certainty for October, the question will be by how much fuel prices will ultimately rise," said the AA.

Edited by News24Wire

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