Weaker rand, rising oil prices threaten November fuel relief

South African motorists will be looking to Finance Minister Enoch Godongwana’s Medium-Term Budget Policy Statement (MTBPS) on Wednesday for possible relief as they face projected petrol price increases of nearly R2 a litre in November.

Mid-month Central Energy Fund (CEF) data shows that rising global oil prices and a weakening rand are putting pressure on fuel price recoveries, pointing to another costly month at the pumps if current trends continue.

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The data show under-recoveries of R1.67 a litre for 93-octane petrol and R1.72 for 95-octane petrol.

Diesel motorists are also facing higher costs, with projected increases of R1.23 a litre for 0.05% sulphur diesel and R1.24 for 0.005% sulphur diesel at the wholesale level.

Illuminating paraffin is showing an even larger under-recovery of R3.01 a litre.

If the projections hold, petrol 93 could cost R31.55 a litre, while petrol 95 could reach R31.97. Diesel prices are projected to rise to R33.18 a litre for 0.05% sulphur and R34.53 for 0.005% sulphur. Illuminating paraffin could reach R28.19 a litre.

The figures are projections based on mid-month data and are not the final price adjustments.

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The Department of Mineral and Petroleum Resources is expected to confirm the November fuel prices ahead of their implementation on November 4.

Global pressures drive fuel costs

The expected increases come as rising international oil prices and a weaker rand continue to put pressure on South Africa’s fuel price recoveries.

Escalating tensions in the Middle East have added to uncertainty in global oil markets, while international conflicts and exchange-rate movements continue to influence local fuel costs.

South Africa has already experienced record fuel prices this year, with diesel reaching historic levels in May following the US-Iran conflict and petrol setting a new record in June.

Another round of increases could place further pressure on households already grappling with the cost of living, as higher fuel costs affect commuting, transport and the prices of goods and services.

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Government weighs further fuel relief

President Cyril Ramaphosa said the government was giving “serious consideration” to further fuel price interventions, but warned that any relief would have to be weighed against the cost to the state and the potential impact on funding for other departments.

Speaking to the media on the sidelines of the Bana Pele Leadership Summit in Johannesburg on Monday, Ramaphosa said the government had already spent billions cushioning consumers against unprecedented fuel price increases.

Previous relief included a temporary R3-per-litre reduction in the fuel levy announced in April.

The reduction was halved in June before being withdrawn completely.

The intervention resulted in at least R17.2 billion in foregone tax revenue.