South Africa Here is the expected petrol price for August

South Africa Here is the expected petrol price for August

South Africa Here is the expected petrol price for August
South Africa Here is the expected petrol price for August

Mid-month data from the Central Energy Fund indicate that drivers may experience the first drop in gasoline prices in months; however, this will be undermined by the government’s complete withdrawal of its interventions.

According to the data, which represents a snapshot of market conditions as of July 14, 2022, the price of gasoline could decrease by as much as R1.08 per litre the following month, while the price of diesel is currently over-recovering by 94 cents per litre.

The mid-month snapshot is as follows:

  • Petrol 95: over-recovery/decrease of 98 cents per litre;
  • Petrol 93: over-recovery/decrease of 108 cents per litre;
  • Diesel 0.05%: over-recovery/decrease of 92 cents per litre;
  • Diesel 0.005%: over-recovery/decrease of 94 cents per litre;
  • Illuminating Paraffin: over-recovery/decrease of 95 cents per litre.

The Department of Energy has emphasized that the daily snapshots are not predictive and do not account for additional potential changes like slate levy adjustments or changes in retail margins, which are determined by the department at the end of the month after taking all relevant factors into consideration.

Based on an examination of the entire period, the DoE makes adjustments. Furthermore, before the month is over, the outlook could drastically change.

Additionally absent from the snapshot are the fuel price interventions that the National Treasury and the Department of Mineral Resources and Energy announced in April 2022. Following the initial interventions, the general fuel levy for April and May was reduced by R1.50. This was then extended through June before being cut in half in July when the levy’s rate of 75 cents per liter was reinstated.

The remaining 75 cents per litre will be reinstated to the price in August, marking the end of the intervention.

This indicates that without the government’s intervening extension, the reduction in fuel prices in August would be closer to 23 to 33 cents per litre for gasoline and 17 to 19 cents per litre for diesel.

Apart from interventions, the international price of petroleum products, which is primarily determined by oil prices, and the rand/dollar exchange rate applied to the purchase of these products, both have an impact on local fuel price fluctuations.

Oil prices fell below $100 a barrel for the first two weeks of July, which prompted a significant over-recovery in local prices. However, the weakening rand, which adversely affected prices, seriously undermined this.

Oil prices

Oil is poised to end the week below $100 a barrel for the first time since early April after another volatile trading period marked by escalating concerns over an economic slowdown, Bloomberg reports.

A stronger dollar and Covid-19 outbreaks in China have added to pressure on oil prices, it said.

“West Texas Intermediate tumbled below $91 a barrel on Thursday, erasing all of the gains seen in the wake of Russia’s invasion of Ukraine in late February, before clawing back some of those losses. Futures edged higher on Friday, but the US benchmark is still down around 8% for the week.”

While prices are trading lower for now, Goldman Sachs predicts that prices will still climb in 2022. In what it calls an “adverse scenario”, the finance group believes Brent crude’s fair value would be $120 in the second half of 2022 and $110 in 2023, down from previous forecasts of $135 and $125 a barrel, respectively.

Even in the group’s worst-case scenario, it projects the fair value of oil at $105 for H2 2022 and $90 a barrel in 2023, also above market forwards.

“As a result, we reiterate our bullish oil price view following the recent sell-off,” it said.

The drop in the fuel price has contributed almost R2 per litre to the over-recovery in local fuel pricing.

South Africa Here is the expected petrol price for August
South Africa Here is the expected petrol price for August

Exchange rate

The rand has weakened significantly in recent weeks, climbing to fresh highs around R17.17 to the dollar on Friday (15 July).

Despite local troubles, including weeks-long load shedding and warnings of civil unrest, the rand’s weakness has largely been at the whims of global markets and strong performances from major economies.

Ryan Booysen, managing director of DG Capital Forex Solutions, noted that “most of the collapse is due to dollar strength”.

“The US dollar is at its strongest level in 20 years. The dollar index, which measures the value of the US dollar against a basket of six other major currencies, has strengthened some 12.7% since 1 January 2022 and 17.1% over the past 12 months, on the back of a hawkish Fed and the start of the US interest rate hiking cycle,” he said.

“While other central banks are also on a tightening path – the SARB included – the Fed is doing so more aggressively than in the rest of the globe, hence the extreme strength of the US dollar.”

Market worries over high inflation are increasingly being replaced by fears of excessive interest rate hikes that drive economies into recession. This has pushed investors into more secure markets like the dollar, while avoiding riskier markets like the rand.

“With a risk-off mindset provoked by recession fears in the US and Europe, and the ongoing hostility in Ukraine and China growth concerns, (we have) seen a flight of assets to the safety of the greenback,” Booysen said.

Domestically, severe load shedding has also worried markets over the country’s growth prospects, which in turn risks negatively impacting state finances via revenue generation.

The weaker rand has contributed between 90 and 98 cents per litre to an under-recovery in local fuel pricing.

The table below shows how prices would be affected at mid-month rates.

Inland July official August Expected
95 Petrol R26.74 R25.76
93 Petrol R26.31 R25.23
0.05% diesel (wholesale) R25.40 R24.48
0.005% diesel (wholesale) R25.53 R24.59
Illuminating Paraffin R19.86 R18.91


Coastal July official August Expected
95 Petrol R26.09 R25.11
93 Petrol R25.66 R24.58
0.05% diesel (wholesale) R24.75 R23.83
0.005% diesel (wholesale) R24.89 R23.95
Illuminating Paraffin R19.15 R18.20

The table below shows how prices would be affected after the conclusion of the government’s fuel price interventions.

Inland July official August Expected
95 Petrol R26.74 R26.51
93 Petrol R26.31 R25.98
0.05% diesel (wholesale) R25.40 R25.23
0.005% diesel (wholesale) R25.53 R25.34


Coastal July official August Expected
95 Petrol R26.09 R25.86
93 Petrol R25.66 R25.33
0.05% diesel (wholesale) R24.75 R24.58
0.005% diesel (wholesale) R24.89 R24.70
Petrol price will overburden

Petrol price will overburden


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