Fourth consecutive fuel price decrease expected in new month

Experts say mid-month data from the Central Energy Fund indicates a fuel price decrease for September.

This would mark the fourth consecutive month of fuel decreases.

The experts say lower Brent crude oil prices and a stronger rand are some of the reasons for the expected decrease.

The Automobile Association (AA) said that fuel prices were set to decrease across the board in September, marking the fourth consecutive time this year that fuel prices have dropped in South Africa.

“Based on unaudited mid-month data from the Central Energy Fund (CEF) petrol, diesel and illuminating paraffin will cost less in September than at any other time this year.

The current data indicates that ULP95 is set to decrease by around 68 cents/litre and 63c/l for ULP93. Diesel is also set for a decrease of around 52c/l.

The unaudited data also indicates a reduction in the cost of illuminating paraffin of around 78 c/l.

“These decreases, if they materialise, would bring the price of fuel down to levels last seen at the beginning of the year and would come at a very critical time for South Africans, who have had to dig deeper into their pockets to fill up their vehicles and food trolleys,” the AA said.

The AA said that according to the CEF’s data, lower-on-average international product prices were the main driver behind the potential fuel decreases for September.

Professor Irrshad Kaseeram of the University of Zululand’s economics department said that Brent crude oil was heading downwards since Qatar had urged Iran to de-escalate the tensions with Israel following the current Gaza ceasefire talks brokered by the US, Qatar and Egypt.

“US President Joe Biden announced on Friday that a ceasefire deal was imminent and likely to happen soon,” Kaseeram said.

Kaseeram said another important global factor was the slowing GDP growth in China as reflected by their rising unemployment, falling house prices, and reduced oil demand.

“On the South Africa front the rand-dollar exchange rate since August 9 has been trending downwards, where it breached the R18 resistance level this weekend. If these conditions prevail we will definitely see petrol and diesel prices drop by around 65 and 55 cents a litre, respectively,” he said.

Johann Els, group chief economist at Old Mutual, said current data points to a decrease of around 80 cents a litre in the price of fuel for September.

“The price of Brent crude oil is hovering around $80 a barrel, which is a good thing, and the rand has also strengthened from over R18 to the dollar in July, however it has fallen to below R17 a dollar currently. Overall, the rand oil price is down 2% since the start of the month,” Els said.

He added that there was still a week to go for before the calculation cycle the fuel price ends.

“I do see the 80 cent decrease in fuel happening at the beginning of September and expect the rand to be even stronger by the end of the month. The fuel price decrease will bring inflation down even further, and this could well lead to a rate cut in September.”

Professor Bonke Dumisa, an independent economic analyst, said as things stand both petrol and diesel were set to decrease in September.

“Brent crude oil is around $82 a barrel and the rand is stronger against the dollar. I don’t anticipate the dollar to strengthen because of the expectation of an interest rate cut, and that is good news for the South African rand for our

fuel price and inflation,” Dumisa said.

The Mercury