South African drivers are bracing for another blow to their wallets as fuel prices are set to increase across the board next week, with diesel facing particularly steep hikes of up to 77 cents per litre.
According to month-end data from the Central Energy Fund (CEF), persistent under-recoveries in both petrol and diesel prices throughout November have persisted despite a relatively stronger rand, as rising global oil prices continue to outweigh currency gains.
Projected price increases:
- Petrol 93: 20 cents per litre increase
- Petrol 95: 26 cents per litre increase
- Diesel 0.05% (wholesale): 60 cents per litre increase
- Diesel 0.005% (wholesale): 77 cents per litre increase
- Illuminating paraffin: 68 cents per litre increase
The data reveals that petrol prices are showing under-recoveries of between 20 and 26 cents per litre, while diesel faces much steeper under-recoveries ranging from 76 to 93 cents per litre.
Despite the rand maintaining relative strength following the medium-term budget review, averaging much stronger than October levels, the currency gains have been insufficient to offset rising international fuel costs.
The rand’s contribution shows a positive over-recovery of approximately 4 cents per litre, but this is being significantly undercut by international product price movements causing under-recoveries of 24-81 cents per litre.
The local currency has been trading in a narrow range of R17.15-R17.35 to the dollar since the budget review, after briefly touching sub-R17 levels around R16.97 following the mini budget and an S&P Global ratings upgrade.
International oil markets have experienced heightened volatility throughout November, with Brent crude currently trading around $63 per barrel – higher than October’s average. This increase comes despite oil falling 15% year-to-date due to expectations of oversupply.
Geopolitical tensions, particularly between the United States and Russia over the Ukraine conflict, continue to create market uncertainty. According to JPMorgan Chase & Co., the oil market faces a daily surplus of 2.8 million barrels next year and 2.7 million in 2027.
Market analysts are closely monitoring potential changes in Russian oil sanctions, which could significantly impact global supply. Bloomberg analysis indicates that Russia has accumulated over 16 million barrels of crude in storage at oil fields – levels seen only twice since the 2022 Ukraine invasion.
Any easing of Western sanctions following a potential peace deal could release restricted supplies to major buyers including China, India, and Turkey, though analysts caution that such developments would take considerable time to materialize.
The Department of Petroleum and Mineral Resources will announce the official fuel price adjustments before they take effect on Wednesday, 3 December.
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