We’re expecting an announcement from the Energy Department before the clock strikes midnight on Tuesday evening, detailing how much South Africans will have to fork out at the fuel pumps for the rest of the month. Although there’s some good news on the petrol price front, there’s also a major caveat to report.
It’s important to understand how SA’s petrol price is actually determined. As a country heavily reliant on imports, both the global cost of crude oil AND the international performance of the Rand dictate what we pay on the forecourt.
For the first time since the Russian invasion of Ukraine, fuel costs have calmed, and experienced something of a freefall since reaching a peak back in March. Usually, this would be enough to confirm a substantial decrease in value.
Alongside the R1.50 that’s been removed on fuel duty for the remainder of May, the omens are good for the petrol price to be slashed. Well, that’s until we check ZAR’s foreign exchange status…
The Rand is having a torrid month against other international currencies, losing significant ground of the US Dollar. This trend has been picked up by Investec, who now believe that a higher exchange rate has the potential to significantly reduce the size of our forecast petrol price drop.
Although diesel is still slated to increase, East Cape Fuels predict that BOTH grades of petrol will be cheaper over the next four weeks. However, the motorists of Mzansi will be left to wonder ‘what might have been’…
“The domestic currency is over a rand weaker, having given up trying to remain below R14.50/USD after the first half of the month and now instead is running closer to R15.50/USD.”
“The negative impact to SA’s trade balance over April from the extreme floods in KZN and disruptions to exports, will have had a particularly negative effect on the domestic currency, along with lower commodity prices.”Investec statement