The data, which serves as a snapshot of market conditions as of 12 August 2022, shows that the petrol price could drop by as much as R2.60 litre next month, while diesel is showing an over-recovery of R2.30 per litre.

The mid-month snapshot is as follows:

  • Petrol 95: over-recovery/decrease of 260 cents per litre;
  • Petrol 93: over-recovery/decrease of 244 cents per litre;
  • Diesel 0.05%: over-recovery/decrease of 230 cents per litre;
  • Diesel 0.005%: over-recovery/decrease of 225 cents per litre;
  • Illuminating Paraffin: over-recovery/decrease of 193 cents per litre.

The Department of Energy has stressed that the daily snapshots are not predictive and do not cover other potential changes like slate levy adjustments or retail margin changes, which are determined by the department at the end of the month, taking all variables into account.

The DoE makes adjustments based on a review of the entire period. Furthermore, the outlook can change significantly before month-end.

The expected price changes are contingent on current market conditions persisting through to the end of the month. Notably, even if these changes come into effect, fuel prices are still much higher than they were in February before the impact of the Russian invasion of Ukraine was felt in global markets.

Local fuel price fluctuations are impacted by two main factors – the international price of petroleum products, driven mainly by oil prices, and the rand/dollar exchange rate used in purchases of these products.

For the first two weeks of August, oil prices stayed below $100 a barrel, contributing to a significant over-recovery in local prices. This was supported by a stronger rand versus the dollar, which also contributed to an over-recovery, albeit much smaller.


Oil prices

Crude has been whipsawed by a flurry of both bearish and bullish headlines in recent days. Yet cooling inflation that may ease the pace of interest-rate hikes by the Federal Reserve has supported commodities broadly, Bloomberg reported.

Brent crude was trading around $97 a barrel on Monday morning.

Crude has ticked lower over the past couple of months on concerns about an economic slowdown, shedding all the gains put on following Russia’s invasion of Ukraine. Money managers have cut their bullish bets on oil to the lowest in over two years, according to the Commodity Futures Trading Commission.

“Renewed Covid lockdowns in China are weighing on demand on top of recessionary worries, while supply concerns have melted away,” said Vandana Hari, founder of Singapore-based Vanda Insights. The prospect of Iranian supply returning adds to the bearish sentiment, she added.

China’s economic recovery unexpectedly weakened in July as fresh Covid-19 outbreaks impacted consumer and business spending. Industrial output rose 3.8% from a year ago, lower than June’s 3.9% and missing economists’ forecast of a 4.3% increase. Oil refining also fell as plants shut for maintenance.

The outlook for the oil market remains mixed. The International Energy Agency raised its forecast for global demand growth this year, while OPEC expects the market to tip into a surplus this quarter.


Exchange rate

For months the rand has been working against local fuel prices, with its weaker position in the market undercutting the benefits from lower global oil prices.

While the rand has had a host of local issues to contend with – prolonged load shedding, water shortages and the 75 basis point interest rate hike by the Reserve Bank – its movements have largely been at the mercy of global markets, particularly against the dollar.

The dollar surged at the end of July after a 75bp rate hike by the US Fed indicated its aggressive stance towards inflation. However, more recent indications have been that interest rates are reaching their peak, softening the dollar.

The Bureau for Economic Research (BER) said that the recovery was a market correction.

“Global financial markets readjusted somewhat after the initial risk-on reaction following the CPI release, as several US Fed policymakers cautioned that inflation remained too high and that one better-than-expected data point would not change the near-term policy tightening path,” it said.

The rand benefitted from the subdued dollar and the risk rally last week, appreciating sharply towards R16.20/$ on Friday – its highest level since 28 June – after reaching a high of R16.11/$ during trade on Thursday. For the week, the rand gained more than 3% against the dollar.

According to Bianca Botes, director at Citadel Global, however, the rand remains at the mercy of the broader global environment, and any shift in sentiment could see the currency tumble again.

For now, the relatively stronger rand is contributing to a 25 – 30 cents per litre recovery in local fuel prices.


This is how the expected price changes could reflect at the pumps:

Inland August Official September Expected
95 Petrol R25.42 R22.82
93 Petrol R24.99 R22.55
0.05% diesel (wholesale) R24.52 R22.22
0.005% diesel (wholesale) R24.62 R22.37
Illuminating Paraffin R18.42 R16.49
Coastal August Official September Expected
95 Petrol R24.77 R22.17
93 Petrol R24.34 R21.90
0.05% diesel (wholesale) R23.87 R21.57
0.005% diesel (wholesale) R23.98 R21.73
Illuminating Paraffin R17.63 R15.70