The Automobile Association expects significant decreases to fuel prices across the board in September based on current unaudited mid-month data from the Central Energy Fund (CEF).
The expected decreases will not be mitigated by any refunds to the General Fuel Levy (GFL), so they will be substantial.
The decreases to fuel prices in August were offset somewhat by the 75c/l for petrol and diesel which were returned to the GFL.
But the decreases expected in September don’t have that problem.
According to the data, 95ULP is expected to drop by around R2.60/l, and 93ULP by around R2.45/l.
The wholesale price of diesel is expected to decrease by around R2.30/l and the price of illuminating paraffin by almost R2.00/l.
The main drivers behind the decreases are a strengthening Rand and lower international oil prices.
The expected decreases are good news for consumers who have been battered and bruised by these prices the past six months. With these expected decreases, the price of 95ULP will dip below R23/l and the price of 93ULP will cost just more than R22.50/l. While fuel is still more expensive now than it was at the beginning of the year, these forecast decreases do offer some relief.
The Association says while these figures are promising, it must be remembered that this is only mid-month data and that the picture may change come month-end before the adjustments for September are made.
The Department of Energy usually announces the final adjustments to the fuel price a few days before it comes into effect, on the first Wednesday of every month. These changes will thus be in effect from 7 September.
Fuel prices have skyrocketed this year, mainly due to increases in international oil prices, which has been driven by Russia’s invasion in Ukraine.
After hitting a high of $123 in March, oil prices have slumped. On Monday, Brent crude oil dropped almost 5% to $93.46 per barrel – around its lowest levels in six months.
AFP reported that the weakness was due to new data that showed a slowing China’s economic recovery.
Meanwhile, talks are underway to revive Iran’s 2015 nuclear accord with world powers, and a deal would mean that Iran’s crude output of 2.5 million barrels per day would no longer be under international sanctions and help relieve supply constraints that have been pushing up prices.
Motorists can expect a slight reduction in fuel prices by next week Wednesday.
Economist at FNB, Koketso Mano, says this reduction could be made possible by the overall price of Brent crude oil which has significantly fallen over the past 2 weeks.
The current over-recovery, on the country’s fuel prices, will also add to this reduction.
Mano says the projection is that petrol prices may reduce by R1 per litre, while diesel prices may drop by up to 60 cents per litre.
This reduction will however not result in an immediate reduction in the cost of daily goods such as food and transport.
Mano says the more than R2 increase in fuel prices, which was announced earlier this month, will continue to affect the prices of goods for a while still.
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⛽️Although economists predict that the country's fuel prices will see a decrease next week, the more than R2 increase in fuel prices will continue to affect the prices of goods for a while still.
— Smile90.4 FM (@Smile904FM) July 27, 2022