South African motorists may be facing another month of rising transport costs after the latest fuel price projections indicated that expected petrol relief has largely disappeared while diesel prices are on course for significant increases.
New data from the Central Energy Fund (CEF) shows that fuel price expectations have shifted dramatically over the course of July, reflecting renewed pressure in global oil markets and raising concerns about the broader impact on households and businesses.
Earlier this month, petrol appeared set for a sizeable price reduction after recording an over-recovery of around R2.50 per litre. However, that advantage has steadily narrowed, leaving motorists with only modest expected price cuts by the end of July.
If current trends continue, 93-octane petrol is expected to decrease by approximately 19 cents per litre, while 95-octane petrol could fall by around 14 cents per litre.
While any reduction will be welcomed by motorists, it represents only a fraction of the increases experienced earlier this year when geopolitical tensions in the Middle East sent global fuel prices sharply higher.
Diesel drivers face a much bigger burden
The outlook for diesel users is considerably more severe.
What began as an over-recovery of almost R3.00 per litre has now reversed into a substantial under-recovery, placing diesel on track for one of the largest monthly increases this year.
Current CEF projections suggest:
- Diesel (0.05%) could increase by R1.60 per litre.
- Diesel (0.005%) could rise by R1.42 per litre.
- Illuminating paraffin may increase by approximately R1.27 per litre.
Because diesel powers much of South Africa’s freight transport, agriculture and logistics sectors, analysts warn that higher pump prices could quickly translate into increased food prices, transport costs and broader inflationary pressure.
Global energy markets remain under pressure
The latest fuel outlook comes despite the South African Reserve Bank keeping the repo rate unchanged at 7%, a move that offered temporary financial relief to indebted households.
However, renewed volatility in global energy markets threatens to offset some of that benefit.
The recent escalation of conflict in the Middle East, including disruptions affecting shipping routes through the Strait of Hormuz and the Red Sea, has pushed oil and jet fuel prices higher, increasing costs across the transport sector.
The aviation industry continues to feel the impact as well.
Low-cost airline FlySafair confirmed that the fuel surcharge introduced in March remains in place because of elevated jet fuel prices. Although the airline has reduced the surcharge from its April peak, it says the additional charge will only be removed once market conditions improve.
FlySafair Chief Marketing Officer Kirby Gordon said the company expects the aviation industry to adjust to what could become a “new normal” for fuel costs as uncertainty continues in global energy markets.
With the Department of Mineral Resources and Energy expected to announce the official fuel price adjustment at the end of the month, motorists and businesses will be watching closely to see whether international oil prices stabilise before August’s changes take effect.
Source: The South African