Fuel price decrease still possible for June, despite recent uptick in oil prices
International oil prices have stabilised after a surge earlier this week, creating a mixed picture for the local fuel price outlook in South Africa. While modest reductions in fuel prices are still likely for June, their magnitude may diminish if current oil price trends continue.
International Oil Prices and Their Impact on Fuel Costs
According to the latest data from the Central Energy Fund (CEF), fuel price cuts of around 40 cents per litre for petrol and up to 75 cents per litre for diesel are currently on the cards for next month. However, these projections are subject to change, particularly if global oil prices remain elevated.
Midweek data showed Brent Crude oil prices hovering near two-week highs at approximately $66 per barrel, or R1,207, which is only slightly lower than the $66.40 average during the previous pricing review period. This marginal difference means the global oil market is having a limited effect on the fuel price forecast at this stage.
Earlier in May, oil was trading at around $61 per barrel, but optimism surrounding the easing of tariff tensions between China and the United States caused a late rally in prices. This temporary optimism was driven by the announcement of a 90-day trade truce between the two economic superpowers, a move that was well received by global markets.
However, Joseph Dahrieh, Managing Principal at Tickmill, warned that the end of this truce could spark fresh instability in the oil market. “Although the current pause in trade hostilities is a positive step, the expiration of the agreement could lead to renewed uncertainty and price volatility,” he cautioned.
Fuel Prices May Still Drop — But Watch the Rand and Crude Oil
While international oil prices are a key component in determining local fuel prices, the strength of the rand is also playing a pivotal role this month. So far in May, the South African rand has shown signs of resilience, trading at an average of R18.38 to the US dollar, significantly stronger than the R18.83 average during the last review period.
This appreciation of the rand has provided some cushion against rising crude oil prices, allowing for potential fuel price cuts. However, if oil prices remain high or increase further, these gains could be neutralised. Industry experts suggest that if the current situation persists, expected fuel price reductions could shrink to around 15 cents per litre for petrol and 40 cents per litre for diesel by month-end.
Looking ahead, global fuel supply dynamics could also come into play. The OPEC+ group, which includes major oil-producing nations, has indicated that it plans to maintain its current elevated production levels. This decision could help offset rising prices by increasing global supply.
“Geopolitical developments remain a wildcard in the equation,” added Dahrieh. “In particular, ongoing discussions in key regions like Iran could influence global fuel supply. If negotiations are successful, we may see additional oil volumes entering the market, which could help stabilise or even lower prices.”
South African motorists are currently paying R21.29 per litre for 93 Unleaded petrol in Gauteng. For 95 ULP, the inland price stands at R21.40 per litre, while coastal regions enjoy slightly lower rates at R20.60 per litre.
These prices follow the modest fuel price reductions implemented at the beginning of May, when petrol dropped by 22 cents per litre for 95 ULP and 21 cents for 93 ULP. Diesel prices also declined, falling by 41 cents per litre for 50ppm and 42 cents per litre for 500ppm.
As we move into the final weeks of May, the outlook for fuel prices in June remains cautiously optimistic. While current trends point to possible price cuts, they are far from guaranteed. Much will depend on how oil prices behave in the coming weeks and whether the rand can maintain its current strength.
Motorists are advised to stay informed and monitor updates from the Central Energy Fund and global markets. With multiple variables influencing local fuel prices — including oil supply levels, geopolitical tensions, and currency fluctuations — the situation remains fluid.
One thing is clear: even modest reductions will come as welcome relief for South African consumers already feeling the pinch at the pump.
Source- IOL
