Petrol price set to drop from 5 July

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Motorists will get some relief at the fuel pumps when the price of petrol drops slightly on Wednesday, a statement from the department of mineral resources and energy said.

But the price of diesel is set to rise by between 12 to 18 cents per litre, helping maintain inflation pressures, as logistics firms and retailers, which are spending billions of rands to run generators to keep the lights on during load-shedding, pass on the additional costs to consumers.

Economists have warned that despite the latest reprieve in the petrol price, the cost of diesel and petrol is likely to rise further during the rest of 2023.

The department of mineral resources and energy said the price of 93 grade and 95 grade petrol will drop 24 cents and 17 cents per litre, respectively, from Wednesday, but that of diesel will rise by as much as 18 cents per litre. The cost of 93 grade petrol will dip to R22.06 per litre inland and R21.34 in coastal areas, while 95 grade petrol will cost R22.46 inland and R21.74 at the coast. The price of diesel will rise to as much as R19.81 per litre.

The cost of illuminating paraffin will decrease by four cents per litre to R13.92 in inland areas and R13 at the coast. LP gas will cost R2.96 more per kilogramme, at R31.11 inland and R28.53 at the coast.

South Africa adjusts its fuel prices each month, based on global prices and the rand exchange rate.

According to mineral resources and energy minister Gwede Mantashe, the average international product prices for petrol, diesel and illuminating paraffin increased during the period under review, while the price of LPG dropped. 

The average Brent Crude oil price decreased slightly from $75.90 to $75.10 per barrel due to recession fears and the decision by OPEC and non-OPEC members not to increase production cuts at their last meeting.

“The rand appreciated, on average, against the US dollar during the period under review when compared to the previous one. This led to lower contributions to the basic fuel prices of petrol, diesel and illuminating paraffin,” Mantashe said in the statement.

“The stronger rand affected petrol and illuminating paraffin prices positively, resulting in an overall decrease,” he added.

FNB Senior Economist Keketoso Mano said the risk to the rand remained “material especially when considering local risk events which are still to unfold, while oil prices should get financial support from a seasonal uplift in demand in the northern hemisphere, and the contained improvement in activity in China during the second half of the year”.

She added that further OPEC production output cuts were likely if global growth forecasts disappoint on the slow side.

“Overall, this supports a slight rising trend in fuel prices in the remainder of this year and we speak with caution given the high volatility that is featured in the data,” Mano said.