April’s fuel price cuts look set to be followed by further decreases in May, but thanks to a weaker rand, the savings won’t be as substantial this time around.
Mid-month data from the Central Energy Fund (CEF) points to petrol price decreases in the region of 20 cents for 95 Unleaded and 18 cents for 93 Unleaded, while a slightly stronger over-recovery on diesel implies price cuts in the region of 40 cents for both grades.
However, with the latest daily data dipping even further into the green, reductions of 30 cents for petrol and 50 cents for diesel are certainly possible if current trends persist.
That is currently a big if, given the significant economic volatility seen since the first week of April, when US President Donald Trump announced sweeping global tariffs, only to backtrack the following week with a 90-day reprieve on many of the proposed levies after a significant market crash.
Rand thwarts bigger price cuts
The net result has been a significant depreciation of the South African rand. Although by mid-April it had bounced back to R18.93 to the US dollar, from its April 9 low of R19.69, the local currency is still 3% weaker than it was at the beginning of the month.
Had the local currency not depreciated, South Africans would have been in line for price cuts in the region of 55 cents for petrol and 75 cents for diesel.
The predicted price reductions come as a result of sharply lower oil prices, which have also reacted negatively to Trump’s widespread economic disruptions.
Brent Crude oil was trading at $64.40 per barrel on April 15, significantly lower than its $71 average for the previous review period.
The oil price weakness comes as a result of the US trade war with China as well as increased oil production, explains Bianca Botes, Director at Citadel Global.
“The US confirmed tariffs on Chinese imports have been raised to 145%, overshadowing a temporary 90-day tariff pause for other countries. This increase could dampen oil demand from China, the world’s largest importer.
“Additionally, the expanded Organisation of Petroleum Exporting Countries, (OPEC+), accelerated production increases, heightening fears of oversupply,” Botes added.
While news of a possible fuel price decrease is good news for motorists, much could still transpire between now and the end of the current review period in late April, given the volatility that we’ve seen thus far.
95 Unleaded petrol currently costs R20.83 at the coast and R21.62 in the inland regions, where 93 Unleaded retails at R21.51.
This follows significant petrol price decreases of between 58 cents (93 ULP) and 72 cents (95 ULP) that were announced at the beginning of April. Diesel dropped by between 84 cents (500ppm) and 86 cents (50ppm).
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