Diesel prices are set to spike once again in August.
The ongoing conflict in the Middle East has severely impacted South African fuel prices this year, causing sharp spikes in April and May. Although a peace deal provided some temporary relief in July, the return of hostilities means that petrol and diesel prices are unlikely to return to pre-April levels anytime soon.
While the latest snapshot from the Central Energy Fund currently points to petrol price decreases of between 21 cents (95 Unleaded) and 26 cents (93 Unleaded), the strong under-recoveries seen over the past week are likely to erode this further by month-end, with our calculations pointing to only marginal decreases in the region of five cents.
It is a far harsher reality for diesel customers, with current calculations pointing to increases of between R1.63 (50ppm) and R1.80 (500ppm). These predictions are based on the assumption that the under-recoveries will persist at their current levels. Should oil prices continue to retreat, as they have done over the past day, the increases could be in the R1.30 to R1.50 range.
Another potential wildcard is the Slate Levy, a mechanism that helps compensate fuel companies for oil price fluctuations in the preceding month. If the Slate Levy sees a significant reduction from the current R1.14 per litre, then a more substantial petrol price reduction could be on the cards. But given how volatile oil prices have been this year, do not hold your breath.
