Petrol price joy on the cards — with a catch
Barring any significant unexpected political or economic changes, South African motorists can expect fuel prices to remain roughly the same or reduce slightly in 2025.
However, there is a possibility that the government will increase fuel taxes from April 2025, slightly counteracting the expected impacts of reduced oil prices and a stronger rand.
The first major factor that influences the fuel price in South Africa is the price of oil, which is used to produce petroleum.
South Africa has no local oil extraction and must buy all of its supply from overseas, primarily from Nigeria and Saudi Arabia.
The US Energy Information Administration’s (EIA’s) latest short-term energy outlook forecast that the price of a barrel of Brent crude oil in 2025 would remain close to its late 2024 level.
It expects the average price to be roughly $74 for the year, roughly 8.6% lower than the $81 average of 2024.
However, the EIA cautioned that two key issues could create price uncertainty: the ongoing Middle East conflict and the willingness of members of the OPEC+ countries of oil giants to adhere to voluntary production cuts.
The EIA said that although it expects OPEC+ countries to keep supply constrained, non-OPEC+ countries will increase outputs, resulting in an overall increase in fuel production and inventory.
Greater supply typically results in lower oil prices.
“We forecast that inventory builds will put some downward pressure on crude oil prices later in 2025, with Brent falling from an average of $74 per barrel in Q1 2025 to an average of $72 per barrel in Q4 2024,” the EIA said.
Financial giants HSBC and Morgan Stanley also expect the average price of Brent Crude oil to be roughly $70 per barrel in 2025.
The graph below shows historic global fuel production volumes for 2022 and 2023 and the EIA’s forecasts for production volumes in 2024 and 2025.
Rand also shaping up nicely
Oil and petroleum are sold in US dollar, so the rand’s value against the greenback also plays a major role in fuel pricing.
According to an analysis by Ebury Partners in October 2024, the rand is set to improve to R16.75 against the dollar in 2025.
Investec chief economist Annabel Bishop has provided a more conservative outlook based on investor concerns over renewed global trade wars in 2025 following the re-election of US President Donald Trump in November 2024.
However, Investec’s latest Rand Note report still anticipated a slightly stronger rand in 2025.
Under its most likely base case scenario, Investec expects the average quarterly dollar-to-rand exchange rate to vary between R17.60 and R17.80 in 2025.
In 2024, the average quarterly exchange rate varied between R17.70 and R18.87.
The table below shows Investec’s expected performance of the dollar against the rand in five different scenarios.
| Forecast | Probability | Q1 2025 | Q2 2025 | Q2 2025 | Q4 2025 |
|---|---|---|---|---|---|
| Severe down case | 1% | R20.50 | R20.70 | R20.60 | R20.40 |
| Lite (domestic) down case | 35% | R19.50 | R19.30 | R19.00 | R19.10 |
| Base case | 50% | R17.60 | R17.70 | R17.80 | R17.60 |
| Up case | 12% | R16.60 | R16.30 | R15.90 | R15.70 |
| Extreme up case | 2% | R15.50 | R14.60 | R14.50 | R14.40 |
The fly in the ointment
One other factor that could derail or at least sour the fuel price outlook somewhat is fuel taxes.
The Road Accident Fund (RAF) has blamed a R1.5-billion deficit in its 2024 financial year on its levy not being adjusted for the past three years.
In light of this, the Organisation Undoing Tax Abuse told MyBroadband it expected the finance minister to announce an increased RAF levy during his budget speech in February 2025.
Outa previously said the only reason the taxes had remained unchanged in 2024 was because it was an election year.
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