Based on the latest projections from the Central Energy Fund (CEF), South African motorists could see a significant decrease in fuel prices in December.
News24 reports that petrol prices are expected to drop by around R1.07 per litre, while diesel prices may decrease by approximately R2.10 per litre. These reductions are contingent on the final prices, which will be officially adjusted on 6 December.
Also read: More fuel price relief on the cards for December if current trends continue
Fuel prices in South Africa are dependent on global oil prices and the rand-dollar exchange rate. Brent crude oil, the international benchmark, began trading above $86 a barrel in November but has since dipped to around $82.
This decline followed a temporary surge driven by concerns that the Israel-Hamas conflict might disrupt oil supplies. However, fears about the global demand for oil, particularly with China’s economy showing signs of weakness, have tempered these gains.
The International Energy Agency recently indicated that the global oil market might not be as constrained as previously anticipated. This outlook is due to higher-than-expected production levels in countries like the United States and Brazil.
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Domestically, the rand has shown considerable strength against the dollar, moving from above R18.70/$ to around R18.20. This improvement is partly due to weaker U.S. inflation data, leading to speculation that the Federal Reserve may not increase interest rates further.
A halt in rate hikes could diminish the dollar’s appeal to yield-seeking investors, further influencing the rand’s performance.
If the anticipated fuel price cuts materialise, it would mark the second consecutive month of reductions. In November, petrol prices dropped by R1.78 per litre, reaching their lowest point since August, while diesel prices decreased by over 80 cents.
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