Lower international oil prices will translate to cheaper fuel in July, but the end of tax relief measures will erode next month’s decreases.
Image: AI / Sora
From July 1, South African motorists will benefit from significant fuel price cuts for petrol and diesel, thanks to falling international oil prices and improved over-recoveries.
The Department of Mineral and Petroleum Resources has confirmed that petrol prices will be cut by R2.01 per litre for 93 Unleaded and R1.96 for 95 Unleaded, while diesel will decrease by R3.59 per litre for 50ppm and R3.14 for 500ppm. The wholesale price of illuminating paraffin will be reduced by R5.23 per litre.
This means that a litre of 95 Unleaded will now cost R25.23 at the coast and R26.11 in Gauteng, where 93 Unleaded will now retail for R25.94. The wholesale price of 500ppm diesel will decline to R23.91 at the coast and R24.78 inland, with the respective prices for 50ppm falling to R24.41 and R25.16 respectively.
This comes after a truce deal signed by the US and Iran earlier this month caused international oil prices to subside. While the truce appears increasingly fragile, with both sides having exchanged fire over the weekend, any further oil price movements won’t affect July’s fuel prices, although August is another story entirely.
Month-end data from the Central Energy Fund showed significant over-recoveries of R3.03 for 95 Unleaded petrol and R3.07 for 93 Unleaded, while diesel is even further in the green with over-recoveries of R4.67 for 500ppm and R5.12 for 50ppm.
However, the month of July sees the government’s temporary fuel tax relief programme coming to an end, after being halved in June, meaning that an additional R1.50 will be worked back into the fuel price as the General Fuel Levy reverts to the full R4.29 per litre for petrol and R4.16 for diesel.
However, this is partially offset by a 43 cent reduction in the Slate Levy, from June's R1.58 to R1.14 per litre. The Slate Levy Mechanism helps compensate fuel companies when the actual cost of importing fuel differs significantly from the regulated fuel price. It is used to smooth out under- or over-recoveries in fuel costs and ensure a stable supply of fuel in South Africa.
Fuel price increases have taken a heavy toll on South African motorists and commuters this year. Since April, the cost of petrol has risen by R7.72 a litre, while diesel has surged by up to R10.16.
Although fuel prices remain on course for another cut in July, the outlook beyond that has become far less certain. Renewed volatility in the Middle East over the weekend has raised the risk of higher international oil prices if tensions escalate or disrupt crude supplies. A sustained increase in oil prices, coupled with any weakening in the rand, could quickly reverse recent gains and place fresh upward pressure on South Africa's fuel prices in the months ahead.