As July 2023 enters its final week, motorists in South Africa are bracing for an anticipated petrol price hike next month.
UPDATE: On Monday, 5 June 2023, the Department of Energy published the petrol price adjustments for June 2023, confirming significant drops for petrol and diesel.
Petrol price forecast for July 2023: Relief expected for motorists
PLEASE NOTE: The petrol price adjustments listed below are directly quoted from the Central Energy Fund’s daily tracking of the basic fuel price (BFP) and do not necessarily reflect the final petrol price determined on the first Wednesday of every month. Despite our best efforts to ensure accurate reporting, it is still the sole responsibility of the reader to double-check petrol prices. Swisher Post, its parent company, partners and affiliates shall not be held liable for any consequence that arises from the journalistic duties performed in sharing this content
The latest data from the Central Energy Fund (CEF) indicates that fuel prices are expected to rise, driven by several factors impacting the global oil market and the exchange rate of the South African rand.
Petrol and Diesel Price Hike Projections
According to the CEF’s latest daily snapshot, motorists should prepare for a steeper petrol price increase of 20-25 cents per litre, while diesel prices may surge by almost 60 cents per litre.
This anticipated hike comes despite some positive developments, such as a stronger rand leading to an over-recovery of 19 cents per litre for all fuel grades.
Factors Influencing Fuel Prices
Despite the rand’s recent strength against the dollar, economists and analysts have warned of potential pressures ahead. An expected interest rate hike in the United States could weaken the rand, impacting local fuel prices.
Furthermore, the global oil price surge has played a significant role in driving fuel price increases.
Global Oil Price Surge
Global oil prices have risen substantially in July, starting the month around $75 a barrel and now trading at just under $83 a barrel. This increase in the cost of international petroleum products is the primary driver behind the anticipated fuel price hike next month.
Factors contributing to the surge include China’s efforts to boost economic growth, resulting in increased energy demand, and OPEC+ cutting supplies to reduce global inventories.
Fuel Price Adjustment and Official Announcement
Motorists can expect the fuel price adjustment to take effect on Wednesday, 2 August 2023. The Department of Mineral Resources and Energy will make the official announcement regarding the fuel price change before that date.
What goes into the final retail price of fuel in South Africa?
Determining the final retail price of petrol in South Africa relies heavily on the rand’s performance in currency markets and oil price movements.
Using this information, the CEF can formulate basic fuel price (BFP) estimates which, in essence, offer South African importers a snapshot into the cost of buying petrol from an international refinery, transporting the product and ensuring it against possible losses at sea and on land.
However, before the retail price of petrol is finalised at petrol stations, several additional costs are included in the BFP:
Government levies
- IP tracer levy (reimbursement to the oil industry for buying IP tracer dye and injecting it into IP to curtail the mixing of IP and diesel)
- General Fuel levy (tax levied by the government)
- Slate levy (to finance the cumulative under-recovery of the industry)
- RAF levy (to compensate for people involved in road crashes and accidents)
- Petroleum products levy (reimbursement to the pipeline users for the applicable NERSA tariff on transporting fuel through the pipeline)
Additional costs
- Wholesale margin (markup to the price of a product to account for wholesaling costs)
- Service cost recoveries
- Storage, handling and delivery costs
- Distribution costs
- Dealers margin (commission to the fuel pump dealers for retail operation)
- Zone differential (applicable to inland regions)
- Customs and excise duty
Monthly adjustments to fuel prices are made on the first Wednesday of each month based on these factors. The next changes will take effect on Wednesday, 2 August 2023.