R107 petrol price joy for South Africa — with a warning for the rest of the year
South African motorists are paying between R107 and R190 less to fill up a tank with petrol in August 2024 than they did four months ago.
The most common fuel tank capacities in South Africa are 45 litres for hatchbacks and small sedans, 60 litres for mid-sized SUVs and large sedans, and 80 litres for large SUVs and bakkies.
In May 2024, it cost R1,147.05 to fill up a 45-litre tank, R1,529.04 to fill a 60-litre tank, and R2,039.20 to fill a 60-litre tank.
The prices of topping up these same tanks in August 2024 have reduced by R107.10, R142.80, and R190.40, respectively.
According to the mineral resources department’s Central Energy Fund (CEF), those savings could rise even further from next month.
The CEF’s daily basic fuel price forecast is based primarily on global oil prices and the dollar-to-rand exchange rate.
As of 22 August 2024, the CEF’s data showed that the retail prices of unleaded 95 and unleaded 93 had overrecoveries of roughly 86 cents and 80 cents, respectively.
In the case of an overrecovery, fuel prices are reduced by an amount equal to the value of the overrecovery.
The wholesale price of 50ppm had an over-recovery of 95 cents, while 500ppm’s over-recovery was about 69 cents.
The latter is used for trucks and heavy-duty vehicles carrying food and other products. Their operating costs can have a significant impact on inflation.
These forecasted changes would continue a trend of declining fuel prices from May 2024.
At that point, the price of petrol in South Africa was at its second-highest ever. The R25.49 per litre of inland unleaded 95 was surpassed only by the R26.74 reached in June 2022.
That came amid rising global oil prices, caused in part by supply constraints due to Russia’s invasion of Ukraine.
Most petroleum used in South Africa is either bought directly from overseas in its final form or refined locally from crude oil, which is also sourced from overseas.
Oil and petroleum are bought in US dollars, which means the rand’s exchange rate to the dollar also impacts prices at the pump.
It would require significant swings in the current oil price and exchange rate in the next few days drastically change the expected declines.
The table below summarises the cost of filling up common fuel tanks in South Africa in May and August 2024, with an estimate for September 2024 based on the CEF’s current data.
While the actual cost of filling up a tank will differ on the coast, the price reductions will be the same.
| Tank size | May 2024 price (R25.49) | August 2024 price (R23.11) | Actual difference | Potential September 2024 price (R22.25) | Potential difference* |
|---|---|---|---|---|---|
| Unleaded 95 — Inland | |||||
| 45 litres | R1,147.05 | R1,039.95 | -R107.10 | R1,001.22 | -R145.84 |
| 60 litres | R1,529.40 | R1,386.60 | –R142.80 | R1,334.95 | -R194.45 |
| 80 litres | R2,039.20 | R1,848.8 | –R190.40 | R1,779.94 | -R259.26 |
| Unleaded 93 — Inland | |||||
| 45 litres | R1131.75 | R1028.7 | -R103.05 | R992.73 | -R139.02 |
| 60 litres | R1509 | R1371.6 | -R137.40 | R1,323.64 | -R185.36 |
| 80 litres | R2,012.00 | R1,828 | -R183.20 | R1,764.85 | -R247.15 |
| *Based on over-recoveries in fuel prices as of 22 August 2024. | |||||
Enjoy it while it lasts
The main reason for the reduction in petrol prices is lower-than-expected oil consumption around the world, particularly in China.
The country has recently experienced slow economic growth and is expected to reduce its diesel consumption.
The US Energy Administration (EIA) expects that global oil consumption will increase by 1.1 million barrels per day in 2024 and 1.6 million barrels per day in 2025, down from a previous estimate of 1.8 million.
However, current relief could potentially see a turnaround in the second half of 2024.
The IEA has forecasted the price of a barrel of Brent crude oil will rise to between $85 and $90 during the period, up from the current sub-$80 price observed throughout much of August 2024.
It attributes this increase to a fall in global oil inventories, which are in part due to ongoing production cuts by the OPEC+ cartel of major oil-producing countries, including Iran, Saudi Arabia, and Venezuela.
Financial giant Morgan Stanley’s latest investment banknote carried by Reuters expects Brent oil prices to drop to the mid-to-high $70 range in 2025.
The other factor influencing fuel prices — the rand’s performance against the dollar — also seems likely to hold steady or strengthen.
Investec’s latest rand note forecasts that the rand will remain at a comparatively strong average of R18.00 to the dollar for the third quarter, compared with R18.25 for the year.
It anticipates that the rand could strengthen further due to subsiding risk aversion, as recent US inflation figures were on par with or lower than expectations.
A key moment in the outlook for the rand will be the US Federal Reserve’s decision on interest rate cuts, due on 18 September 2024.
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