Fuel price decrease still possible for June, despite recent uptick in oil prices
Another fuel price cut is looking likely for June.
Image: Tumi Pakkies / Independent Media.
International oil prices have stabilised following a surge early this week, however modest fuel price reductions are still looking likely for June.
The latest data from the Central Energy Fund is pointing to possible price cuts of around 40 cents for petrol and 75 cents for diesel.
However, if oil prices remain at current levels, this could be eroded by month-end, possibly to around 15 cents for petrol and 40 cents for diesel.
On Wednesday, Brent Crude oil prices hovered near two-week highs, at around US $66 per barrel (R1,207).
This remains slightly below the $66.40 average for the previous review period, which determined the current fuel price structure.
While oil prices are having a negligible effect on the fuel price outlook for June, the rand is coming to the rescue, trading at an average of R18.38 to the US dollar this month so far, which is significantly stronger than the previous review period’s average of R18.83.
Why have oil prices risen?
Oil was trading around the $61 mark earlier in May, but started rising late last week on optimism fuelled by the easing tariff tensions between China and the US.
Although the 90-day trade truce is seen as positive, its expiration could bring renewed market instability, warns Joseph Dahrieh, Managing Principal at Tickmill.
However, any further oil price hikes could be mitigated by higher supply levels, with oil cartel OPEC+ indicating that it is set to maintain its elevated output levels.
“Geopolitical tensions could also affect the market as traders monitor the developments in talks in various regions, including Iran, where a positive outcome could see additional oil volumes hitting the market,” Dahrieh added.
Stable year for fuel prices
South Africans currently pay R21.29 for a litre of 93 Unleaded petrol in Gauteng, with 95 ULP retailing at R21.40 inland and R20.60 at the coast.
This follows price reductions of 22 cents per litre for 95 ULP and 21 cents for 93 UPL at the beginning of the month, while diesel fell by between 41 cents (50ppm) and 42 cents (500ppm).
This followed petrol price cuts of between 58 cents and 72 cents in April and seven cents in March.
93 ULP is currently just 17 cents more expensive than it was in January.
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