Amid global market turmoil weakening the rand, South Africa is poised for significant petrol and diesel price cuts next month due to a notable drop in global oil prices creating a substantial over-recovery in local fuel costs, Cape {town} Etc reports.
Also read: Petrol and diesel prices to fall due to stronger rand
Data from the Central Energy Fund for the end of the first week of August reveals that petrol prices are expected to see an over-recovery of approximately 83 cents per litre, while diesel prices are projected to experience an over-recovery ranging from 81 to 98 cents per litre.
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According to BusinessTech, the decline in international product prices, which tracks lower oil prices, is contributing approximately R1.00 to the over-recovery in fuel costs, while the weaker rand is offsetting this by about 10 cents per litre.
- Petrol 93: decrease of 86 cents per litre
- Petrol 95: decrease of 81 cents per litre
- Diesel 0.05% (wholesale): decrease of 84 cents per litre
- Diesel 0.005% (wholesale): decrease of 98 cents per litre
- Illuminating paraffin: decrease of 101 cents per litre
This week, South Africans experienced a modest reduction in fuel prices, with petrol falling by 15 cents per litre and diesel decreasing by 17 to 28 cents per litre.
These cuts mark the fourth consecutive month of declines, erasing nearly R2.40 from fuel prices and almost completely reversing the R3.00 per litre increase observed since the start of the year.
If current market trends persist and prices are further reduced in September, South Africa could see a net decline in fuel costs for 2024.
As it’s still early in the month, fuel prices may fluctuate significantly or even reverse if market conditions change.
A clearer outlook on price trends will emerge by mid-August and as we approach September.
The current over-recovery in fuel prices is largely driven by the drop in oil prices, which have fallen below $80 a barrel.
Brent futures were trading near $78 a barrel on August 8 after a 2.4% increase the day before.
The rebound follows a seven-month low and is supported by a halt in Libyan crude production and heightened geopolitical tensions.
As markets stabilise, the over-recovery contribution is expected to decrease.
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