Fuel prices in South Africa and why it could change again soon.

November has been a turbulent month for South African fuel prices, with market volatility sending fuel recoveries into negative territory before a slight improvement by the end of the first week. The Central Energy Fund’s data for 7 November shows modest recovery in fuel prices, despite the ongoing market fluctuations that have impacted the rand and global oil prices. Here’s an overview of the key factors driving these changes.

Petrol 93 prices: From under-recovery to small over recovery

At the start of November, Petrol 93 prices showed an under-recovery of nearly 10 cents per litre. However, by the first week of November, these prices flipped to show a small over-recovery of 5 cents per litre. While this change is minor, it demonstrates how global oil prices and fluctuations in the rand can have a direct impact on the cost of fuel in South Africa.

These shifts are part of a broader trend, where other fuel types have also experienced some recovery, although they still remain in under-recovery territory. The 12-cent improvement across these fuels highlights the positive impact of the rand’s recovery and global oil price movements.

Rand’s recovery: Key factor in fuel price changes

A major factor behind the positive swing in fuel recoveries is the stronger rand. The rand weakened significantly following the US presidential election, which initially had a negative impact on emerging markets. However, after the US Federal Reserve’s decision to cut interest rates by 25 basis points, the dollar weakened, giving the rand some breathing room.

Nedbank economists pointed out that expectations of inflationary pressure under President Trump’s policies led to revised market forecasts for future interest rate cuts in 2025. This helped soften the dollar and support the rand’s recovery, easing some pressure on fuel prices.

Despite the improvement, economists don’t expect rate cuts to accelerate in South Africa, although rate hikes could be on the horizon, depending on how global conditions evolve.

Oil prices: Range-bound but still uncertain

Although the rand’s recovery has provided some relief, the global oil market remains volatile. Joseph Dahrieh, Managing Principal at Tickmill, explained that several factors are influencing the oil market:

Hurricane Rafael, which disrupted US crude oil production, has had only a temporary impact.

The potential for tighter sanctions on Iran and Venezuela by the Trump administration could restrict global oil supply, pushing prices higher.

Weaker demand from China, which saw a 9% decline in crude oil imports in October, is raising concerns about slowing consumption.

Nedbank economists noted that despite these challenges, OPEC is expected to maintain its output restrictions into 2025, which may help stabilise prices in the short term. However, the overall oil market outlook remains uncertain, and fuel prices could fluctuate based on supply and demand shifts.

Petrol: Diesel prices still under pressure

While Petrol 93 has shown a slight recovery, diesel continues to face significant challenges. Diesel prices are still looking at an under-recovery of around 50 cents per litre. This suggests that diesel consumers will need to brace for further price increases unless there is a more substantial change in global oil prices.

November’s fuel price changes highlight the ongoing volatility in both the rand and global oil markets. While Petrol 93 prices have seen a small recovery, diesel prices remain under significant pressure. With OPEC’s output decisions, US policies, and global demand influencing the market, consumers should expect continued fluctuations in fuel prices throughout the rest of the year.

Stay tuned with The South African as we monitor the fuel prices in South Africa.

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