News

Good News for South African Motorists: Petrol Prices Expected to Decrease in April

Published by
WIlliam Dube

South African motorists could see some relief in petrol prices in April, as global oil prices are expected to decrease. The latest data from the Central Energy Fund for the week ending 17 March shows that the projected increase in petrol prices is approximately 8 cents per litre, which is far lower than the previously predicted hike of 56 cents per litre at the beginning of the month. Furthermore, diesel prices are on course for a decrease, with the data pointing to a 43 cents per litre cut in the new month.

  1. South African motorists can expect some relief in petrol prices as global oil prices are predicted to decrease, with an estimated 8 cents per litre decrease in petrol prices and a 43 cents per litre cut in diesel prices in April.
  2. The local fuel prices in South Africa are influenced by two factors: the rand/dollar exchange rate and the price of oil. The rand has been the major factor contributing to an under-recovery in fuel prices of around 40 cents per litre.
  3. While oil prices are supportive of lower fuel costs, the rand’s weakness is keeping South Africa down, with heightened global risk aversion amid the turmoil in the US and Swiss banking sectors.

Local fuel prices are tied to two key factors: the rand/dollar exchange rate and the price of oil. The cost of international petroleum products in the market is influenced by oil prices, while the cost of importing these products and fuel, in general, is determined by the rand’s strength.

The rand has been the primary factor contributing to an under-recovery in fuel prices of around 40 cents per litre. Although oil prices were initially contributing to an under-recovery for petrol (not diesel) in the month, the fallout from the collapse of big banks in the US and Europe has sent markets into a spin. Oil prices are currently supportive of lower fuel costs; the rand, however, is still keeping South Africa down.

Oil prices sank due to escalating investor concerns about a global banking crisis eroding appetite for risk assets, including commodities. Brent crude, which has been range-bound between $80 and $90 a barrel, has fallen as low as $70 a barrel, while the US equivalent, West Texas Intermediate, plunged below $65 a barrel.

US benchmark crude futures fell as much as 2.8% to $64.89 a barrel, the lowest level since December 2021, on Monday, despite efforts by central banks to ease tensions.

According to economists at Nedbank, oil prices crashed 12.5% in the last week alone and are down 12.2% over the last month. Year to date, oil prices are down 13.4%.

Although oil prices are currently supportive of lower fuel costs, the rand is still keeping South Africa down. The currency is still trading significantly weaker at around R18.40 to the dollar, despite the dollar weakening due to the aforementioned banking crisis.

According to Nedbank, the rand has been subdued by heightened global risk aversion amid the turmoil in the US and Swiss banking sectors. The South African Reserve Bank also noted this, saying that the local unit isn’t following the expected path of strengthening amid a weaker dollar.

Analysts and the South African Reserve Bank have noted that the local factors are not helping the rand, pointing to the prevailing low-growth environment largely due to load shedding and the wider energy crisis. There are also concerns over inflation coming in higher when Stats SA publishes the numbers this week, which could signal further interest rate hikes to come at the end of the month.

Despite the current market volatility impacting both the oil price and exchange rate, the data shows that prices are trending lower for April. Although there are still two weeks left before the new month, conditions may change, and both motorists and industry experts are watching the situation closely. However, for now, there is at least some good news for motorists, as no fuel tax hikes are coming in the new month to add to any potential woes.

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

Share
Published by
WIlliam Dube

Recent Posts

Tesla Unveils Refreshed Model 3 in North America with Exciting Upgrades

Model 3 Refresh: Tesla introduces a restyled Model 3 in North America, featuring a rear…

January 11, 2024

SEC Twitter Account Compromised, False Bitcoin ETF Approval Post Triggers Market Volatility

Unidentified individual accessed SEC's Twitter through a third party. Lack of two-factor authentication heightened vulnerability.…

January 11, 2024

Global Currency Markets Navigate Economic Uncertainties: Yen Weakens, Dollar Awaits U.S. Inflation Data

Japanese yen falls against the dollar and euro due to persistently shrinking real wages for…

January 11, 2024

Oil Prices Unmoved as Unexpected U.S. Inventory Build Raises Concerns

Unexpected Inventory Build: U.S. crude inventories unexpectedly grew, sparking concerns about weakening fuel demand and…

January 11, 2024

YanGuFang International Group Appoints Interim Executives Amidst CEO and CFO Detainment

Leadership Shake-up: CEO and CFO of YanGuFang International Group detained by Shanghai Police, prompting interim…

January 11, 2024

Cryptocurrency Market Analysis: SHIB, SOL, and ETH Navigate Challenging Terrain

SHIB breaches 200-day EMA, signaling bearish sentiment. Historical data suggests strong buyer reactions and potential…

January 11, 2024