Month-end data from the Central Energy Fund shows the U-turn in recoveries this month has cemented, with a price hike for petrol and diesel all but guaranteed for September.
Month-end data from the Central Energy Fund (CEF) shows the U-turn in recoveries this month has cemented, with a price hike for petrol and diesel all but guaranteed for September.
Fuel price recoveries started the month on the back foot but showed a positive trend towards neutral as hopes for peace between the US and Iran gained momentum.
However, further escalations, including threats of sanctions against Iran by the United States, sent oil markets into another spin, reversing the gains.
This resulted in petrol price under-recoveries swinging from R1 per litre at the start of the month to half that by mid-month, and now back to square one by the end of the month.
Diesel prices showed a similar swing, though not as extreme.
Diesel prices started the month with an under-recovery of R5 per litre, halved by mid-month, and are now back up at around R3 per litre at the end of the month.
These are the recoveries at the end of the month:
Petrol 93:
increase of R0.93 per litre
Petrol 95:
increase of R1.04 per litre
Diesel 0.05% (wholesale):
increase of R2.77 per litre
Diesel 0.005% (wholesale):
increase of R2.98 per litre
Illuminating paraffin:
increase of R2.16 per litre
The reversal is particularly hard for petrol users in the country, as it reflects a complete U-turn on the positive trend seen earlier in the month.
Diesel drivers are still getting the worst of it, with a R3/litre hike on the cards when new pricing kicks in on Wednesday, 2 September, but it is still ~R2/litre less than expected at the start of the month.
The table below outlines the recoveries at start, mid and month-to-date.
FuelMonth Start
RecoveryMid Month
RecoveryMTD
RecoveryMTD Recovery
changePetrol 93(R0.90)(R0.63)(R0.93)
+R0.03
Petrol 95(R1.01)(R0.74)(R1.04)
+R0.03
Diesel 0.05%(R4.84)(R2.73)(R2.77)-R2.07Diesel 0.005%(R4.96)(R2.89)(R2.98)-R1.98
The coming increases are still subject to other month-end adjustments by the Department of Mineral and Petroleum Resources, such as the slate levy.
In line with the provisions of the Self-Adjusting Slate Levy Mechanism, the slate levy of 61.38 c/l was incorporated into the petrol and diesel price structures for August.
This resulted in a 53-cent-per-litre reduction in the slate levy for the month, down from 114 cents previously.
However, given the volatility in global oil prices in August—especially the spikes above $90 a barrel—the levy could be increased again to compensate importers and fuel companies for the additional costs.
This adjustment will only be announced in the official price change announcement.
The month-end under-recovery is driven entirely by the August climb in oil prices.
The movement in international product prices—rooted in the oil price—is creating an under-recovery of up to R1.25 per litre for petrol and R3.25 per litre for diesel.
Oil prices can’t win, with prices retreating thanks to increased flows through the Strait of Hormuz, but being pulled the other way by rising tensions in the Russia-Ukraine war that are curbing output.
While there is no end in sight for the US-Iran war, oil markets have been boosted thanks to optimism over an agreement between Iran and Oman over shipping.
New US economic measures against Tehran and its trading partners also weren’t as harsh as anticipated.
However, strikes by Ukraine on Russian refineries and ports have prevented Moscow from diverting crude into exports. Russia is also now threatening to escalate the conflict.
Oil prices are currently around $89 a barrel, reflecting the ongoing geopolitical uncertainty.
While this is under $90 a barrel and a far stretch from the $100-$120 levels at the start of the US-Iran War, prices are still up more than 40% this year.
Running counter to the oil price under-recovery is the stronger rand, which has broken under R16/$ to reach some of its strongest levels in almost six months.
While the rand was affected by the war at its onset, it has since been bolstered by a weaker dollar and renewed positive sentiment in South Africa.
It is now cutting the under-recovery in fuel prices by between 20 and 28 cents per litre, softening the blow of next week’s hike.
The Department of Mineral and Petroleum Resources will announce the official fuel price changes in the coming days, before they come into effect next week Wednesday, 2 September.
MonthPetrol 95Diesel 0.005%March+R0.20+R0.65April+R3.06+R7.51May+R3.27+R5.27June+R1.43-R2.62July-R1.96-R3.59August-R0.52+R1.23
Total difference
+R5.48
+R8.45
September (current recovery)
+R1.04
+R2.98
Projected difference
+R6.52
+R11.43
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