International oil prices have fallen in the past week, but unfortunately it’s too late to make a meaningful impact on South Africa’s fuel price outlook for August.
Nonetheless, late month unaudited data from the Central Energy Fund (CEF) indicates that minor price reductions are likely for both petrol and diesel next month.
Should the current trajectory continue, petrol is likely to fall by around 12 cents, while the diesel decreases should be in the region of 14 cents for 50ppm and 26 cents for 500ppm.
Should the above price adjustments materialise, 95 Unleaded petrol will cost around R22.35 at the coast and R23.14 in Gauteng, where 93 Unleaded will sink to about R22.74.
Keep in mind that this data does not mean that fuel price cuts are guaranteed for next month. Given that the adjustments are minor, a negative Slate Levy balance, which would compensate for any oil price fluctuations during the preceding month, could put paid to any fuel price relief in August.
The official fuel prices for August will be announced by the Department of Mineral and Petroleum Resources early next week ahead of coming into effect on Wednesday, August 7.
The price of petrol fell by between 99 cents and R1.05 at the beginning of July. This followed a R1.24 cut in June.
More cuts in September?
As it stands, however, the fuel price scenario that we’re seeing is driven by a stronger rand, while stronger oil prices for most of July have cut into that over-recovery slightly.
Although international oil prices were stronger on average in July, Brent Crude oil has fallen in recent days, dipping beneath the $80 per barrel (R1,460) mark.
Should this trend continue, further fuel price relief is likely for September.
On Tuesday, oil prices hit a seven-week low over investor concerns that demand from China could be weakening, Reuters reports.
A review of the fuel price structure by South Africa’s Government of National Unity (GNU) could also have a bearing on local fuel prices once it materialises.
ALSO READ: Review of South Africa’s fuel price equation can’t come soon enough, says AA
During his speech at the opening of parliament on July 18, President Cyril Ramaphosa promised that the government would undertake a comprehensive review of certain administered prices, including the cost of fuel.