The cost of petrol will go down by 15 cents a litre from Wednesday. (Gallo Images)
The cost of petrol will go down by 15 cents a litre from Wednesday, according to the latest monthly fuel price adjustment announced by the department of mineral and petroleum resources.
Motorists will also pay less for diesel, which is set to decrease by 17 cents to 28 cents a litre.
These adjustments will bring the price of petrol in South Africa’s inland areas down to R22.71 a litre for the 93 octane grade, and R23.11 a litre for 95 octane.
South Africa adjusts its fuel prices each month, based on the global oil price and the rand exchange rate.
According to the department, while the rand was stronger during the period under review, the average Brent crude oil price increased from $82.24 to $83.55 a barrel, leading to a smaller decrease in domestic fuel prices than might have otherwise been the case.
The contributing factors to the increased crude oil price were elevated demand due to a decline in United States inventories, reduced production from Canada because of wildfires, tensions in the Middle East as well as continued production cuts by the Organisation of the Petroleum Exporting Countries (Opec).
In June Opec and its allies, collectively known as Opec+, extended most of its deep oil output cuts well into 2025. Opec+ members are cutting production by 2.2 million barrels a day and when they lower supply, oil prices tend to rise. The inverse happens when the group increases market supply.
The department of mineral and petroleum resources said that during the period under review, the rand appreciated on average from R18.44 to R18.23 a US dollar. This led to lower contributions to the basic fuel prices of all products by about R14.00 a litre. In other words, it cost South Africa about R14 less to import petrol and transport the product for the month.
This is the third consecutive month of decrease for petrol prices from about R25.15 a litre in May, largely on the back of lower Brent crude prices.
The Automobile Association had forecast that the price of 95 octane petrol would decrease by seven cents a litre, 93 octane by four cents and the wholesale price of diesel would go down by one cent. The association said that overall, fuel prices in South Africa remain high.
According to Nedbank chief economist Nicky Weimar, global oil prices will only start moderating meaningfully from next year because of geopolitical tensions, and the tailwinds of that will reflect locally the following year, in 2026.
“We have an assumption that the rand will strengthen as the US dollar comes under pressure once they start to cut interest rates, which we still think will be two cuts this year and four cuts next year. Under those circumstances the rand will be firmer,” she added.
“The culmination of a moderately lower global oil price and a firmer rand will ensure that fuel prices are less of an inflationary source than they have been this year.”