Petrol and diesel prices are set to increase sharply, by between R3.27 and R6.19, from Wednesday, May 7. Petrol 93 and 95 (ULP & LRP) will rise by R3.27 per litre. Diesel with 0.005% sulphur will see a significant increase of R6.19 per litre, mirroring the R6.19 per litre increase for diesel with 0.05% sulphur. The Single Maximum National Retail Price for Illuminating Paraffin is also slated to climb by R5.63 per litre. Additionally, the Maximum Retail Price of LPGas will increase by R5.78 per kg specifically in the Western Cape. These adjustments will take effect across the country, impacting various sectors and individual consumers.
Drivers of Price Hikes
The average Brent Crude oil price rose significantly during the period under review, climbing from 93.67 US Dollars (USD) to 101 USD. According to the department, this substantial increase stemmed from "the continued tension between the US and Iran, the closure of the Strait of Hormuz and damage to other key infrastructure which have affected crude oil supply." This geopolitical instability and its direct impact on supply channels played a critical role in the upward trajectory of crude oil costs. The department further explained that average international product prices mirrored the rising crude oil trends, indicating a broad market response to these supply constraints. Prices for middle distillates, including diesel and paraffin, saw larger increases than petrol prices, a phenomenon attributed to higher global demand and reduced supply originating from the Persian Gulf.
These factors collectively resulted in higher contributions to the Basic Fuel Prices. Petrol's Basic Fuel Price increased by R2.04 per litre, diesel's by R4.96 per litre, and illuminating paraffin's by R4.21 per litre. The department also noted that "The prices of Propane and Butane increased during the period under review due to limited global supply since the closure of the Strait of Hormuz." This notes the widespread impact of disruptions in key shipping lanes on various petroleum products.
Government Intervention Details
The government is extending a R3 decrease in the general fuel levy for petrol and a R3.93 reduction for diesel, an intervention designed to cushion consumers from the full impact of global price increases. Despite this levy relief, petrol 93 and 95 (ULP & LRP) will still increase by R3.27 per litre. Diesel with 0.05% sulphur is projected to increase by R6.19 per litre, and diesel with 0.005% sulphur will also see a R6.19 per litre hike. Illuminating Paraffin (wholesale) will also see a rise of R4.22 per litre. In Gauteng, the Maximum Retail Price of LPGas is set to increase by R5.07 per kg, while in the Western Cape, the increase will be R5.78 per kg.
Currency and Market Factors
Prices for middle distillates, including diesel and paraffin, increased more significantly than petrol prices during the review period, according to SAnews. This was attributed to higher global demand and a reduction in supply originating from the Persian Gulf region, exacerbating the price pressure on these specific fuel types. The Rand maintained a constant exchange rate against the US Dollar throughout the period under consideration, demonstrating a period of stability for the local currency. This stability in the Rand's value had a minimal impact on fuel costs, contributing less than one cent per litre to the Basic Fuel Prices for petrol, diesel, and Illuminating Paraffin. The consistent performance of the Rand against the dollar meant that international price movements were the overwhelming determinant of the local fuel price adjustments.
