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April Fuel Update: Diesel Prices Drop, Petrol Soars – Find Out How Much

Published by
WIlliam Dube

Johannesburg – Mid-month data from the Central Energy Fund (CEF) signals some respite for diesel drivers in April, but petrol consumers should brace for higher prices.

Key Takeaways

  • The Central Energy Fund’s mid-month data indicates that diesel prices in South Africa may decrease by around 20 cents per liter in April, while petrol prices are expected to increase by 25-26 cents per liter.
  • Local fuel price fluctuations are influenced by two primary factors: international petroleum product prices, mainly driven by oil prices, and the rand/dollar exchange rate used for purchasing these products.
  • The South African rand has been negatively impacted by poor economic data, the ongoing energy crisis, and risk-off sentiment globally, while oil prices have eased slightly, providing some balance in fuel price adjustments.

Mid-month data from the Central Energy Fund (CEF) signals some respite for diesel drivers in April, but petrol consumers should brace for higher prices.

As of the daily snapshot for 14 March 2023, petrol prices are projected to rise by 25 cents per litre, while diesel prices could decrease by approximately 20 cents. Here are the anticipated changes:

  • Petrol 93: increase of 25 cents a litre
  • Petrol 95: increase of 26 cents a litre
  • Diesel 0.05%: decrease of 20 cents a litre
  • Diesel 0.005%: decrease of 22 cents a litre
  • Illuminating paraffin: decrease of 68 cents a litre

The Department of Energy (DoE) emphasizes that the daily snapshots should not be considered predictive and do not account for other potential adjustments, such as slate levy alterations or retail margin changes. These are determined by the department at the end of the month after considering all variables.

The DoE adjusts fuel prices based on a comprehensive review of the entire period. Consequently, the outlook may change significantly before month-end, and the anticipated price adjustments are dependent on current market conditions persisting until then.

Local fuel price fluctuations are influenced primarily by two factors: the international price of petroleum products, driven mainly by oil prices, and the rand/dollar exchange rate used for purchasing these products.

In the first two weeks of March, the South African rand suffered due to negative economic data, compounded by risk-off sentiment globally. This resulted in a considerable under-recovery (increase) in fuel prices of around 40 cents per litre.

However, oil prices have also significantly eased, providing some counterbalance, particularly for diesel.

Rand Exchange

The rand has experienced a turbulent March so far. South Africa has been confronted with a confluence of unfavorable developments in recent weeks, including the ongoing energy crisis, disappointing GDP data, declining business confidence, and a current account deficit in negative territory. These issues have unfolded amid heightened risk-off sentiment in global financial markets.

Consequently, the rand weakened to R18.74 against the dollar at one point before recovering slightly at the beginning of this week to approximately R18.20. The currency is now trading marginally stronger at R18.16 on Wednesday (15 March).

The rand has been battered on both domestic and international fronts: weak Q4 2022 GDP data indicated that the South African economy is likely entering a technical recession, with the impact of load shedding taking a significant toll. Load shedding has had far-reaching consequences for the economy, eroding business confidence and affecting all aspects of life in the country.

Exacerbating local challenges is the global aversion to risk, which drives investors away from emerging markets like South Africa. This shift in investor sentiment has been fueled by the collapse of Silicon Valley Bank in the United States, heightening concerns that the already tighter lending environment, coupled with rising US interest rates, could prompt other banks to curb lending.

The rand’s performance is inextricably linked to the global economy and, more specifically, the US. Consequently, the current climate does not bode well for the local currency in the coming weeks.

Oil Prices

Although the rand has faced considerable pressure, global oil prices appear to offer some relief.

Oil prices have fluctuated between $80 and $90 per barrel for most of the year, influenced by shifting narratives around global supply and demand.

On one hand, demand forecasts have increased due to China abandoning its zero-Covid policy and resuming business operations. This development has generally pushed oil prices up slightly, counteracting concerns over a global recession and reduced productivity.

Higher prices have also been supported by supply issues resulting from sanctions against Russia due to its war in Ukraine, which led to a price cap on Russian oil, and OPEC+ nations reducing production to uphold prices.

On the other hand, projections suggest that China’s post-Covid production boom will be slower than anticipated, and sanctions against Russia have had minimal impact on supply, pushing prices down.

Bloomberg’s analysis of the market indicates that prices continue to fluctuate between these narratives, with general volatility expected.

“Oil has endured a bumpy year, whipsawed by aggressive monetary tightening from the Fed and optimism around China’s demand recovery. Further gains may be constrained in the near term, with OPEC forecasting a modest surplus in the second quarter, a typical period of soft demand prior to the summer,” the analysis stated. “The price cap imposed on Russian crude is working.”

For now, oil prices favor lower fuel prices in South Africa. After trading around $83 a barrel in the first weeks of March, prices have now dropped below $80 a barrel, hovering closer to $78 a barrel.

Here’s how the expected price changes could be reflected at the pumps:

Region Fuel Type March Official April Expected
Inland 93 Petrol R22.65 R22.90
95 Petrol R22.95 R23.21
0.05% diesel (wholesale) R21.63 R21.43
0.005% diesel (wholesale) R21.72 R21.50
Illuminating Paraffin R15.97 R15.29
Coastal 93 Petrol R22.00 R22.25
95 Petrol R22.30 R22.56
0.05% diesel (wholesale) R20.97 R20.77
0.005% diesel (wholesale) R21.08 R20.86
Illuminating Paraffin R15.18 R14.50

These anticipated fuel price adjustments could bring some relief to diesel drivers while petrol consumers should prepare for higher prices in April. However, it is essential to note that these forecasts are subject to change depending on various factors, including international oil prices and the performance of the South African rand.

WIlliam Dube

William Dube is a finance and economic news expert with over 10 years of experience in economic anaylsis, financial product assessment and market analysis. With a numerous certificates from prestigious universities including but not limited to Yale University and the University of Pennyslivenia. William specializes in providing insightful news developments in South Africa and commentary on investment strategies, risk management, and global economic trends. You can contact him on william@rateweb.co.za

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Published by
WIlliam Dube

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