Home South African Early indications point to a possible fuel price reprieve in May

Early indications point to a possible fuel price reprieve in May


Early indications point to a possible fuel price decrease in May, but June could see a sharp increase when the fuel tax holiday ends.

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YOU’RE going to need to take this with a grain of salt, but early indications are that South African motorists could be in for a temporary fuel price reprieve in May, although with the fuel tax holiday falling away at the end of that month, June will almost certainly see another increase.

Early month data released by the Central Energy Fund shows that, for the first time in months, the fuel price calculation is in a state of ‘over recovery’, due to a stronger rand and softer international oil prices.

Although it’s too early to predict next month’s fuel prices with any degree of certainty, the fact that the last few days have seen over recoveries of around R1 per litre for petrol and 80 cents for diesel is certainly encouraging.

However, in order for that to translate into a corresponding fuel price decrease in May the local currency and international oil prices will need to remain at their current levels or close by. At the time of writing the rand was trading at R14.57, while Brent Crude Oil was listed at $98.48 per barrel.

Oil prices remain a great risk going forward given that the tensions in the Ukraine seem far from over and the Chinese lockdown is bound to end at some point.

According to Reuters, oil prices fell by around 4% on Monday on fears that the Covid-19 pandemic will curtail demand for oil in China. There is also the matter of International Energy Agency (IEA) countries planning to release record volumes of oil from strategic stocks. But analysts have warned that this plan could backfire further down the road if the stockpile is not replenished quickly.

It seems that unless there is an end to the Russia-Ukraine conflict in the near future, the long-term fuel price prognosis remains grim.

Next month could see a small reprieve, assuming that the government doesn’t somehow bank it as a way to buffer June’s inevitable increase when the R1.50 fuel tax holiday falls away.

South African fuel prices are currently at all-time highs, with 95 unleaded petrol costing R21.24 at the coast and R21.96 in the inland regions, where the cheaper 93 grade retails for R21.63.

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