South African motorists have been contending with steeper fuel price increases from Wednesday, September 2.
The proximate cause is genuinely external. Renewed US and Iranian strikes since the start of September have pushed Brent crude from $90 to $97 a barrel, up from a low of $70 in July, while the Russia-Ukraine war continues to squeeze global supply through Ukrainian strikes on Russian refining capacity. Markets are also watching for details of an Iranian shipping arrangement with Oman covering the Strait of Hormuz, through which roughly a fifth of the world's oil transits, any disruption there tends to move prices faster than almost any other single geopolitical variable.
But South Africa's exposure to that shock is compounded by domestic policy timing. In April and May, National Treasury cut the General Fuel Levy by R3.00 a litre for petrol and R3.93 for diesel specifically to cushion households from the same Middle East-driven spike. That relief was phased out in stages through June and fully reversed by 1 July, restoring the levy to R4.10 a litre for petrol and R3.93 for diesel. Combined with the Road Accident Fund levy of R2.25 a litre, motorists now pay upward of R6 in tax alone on every litre of fuel,a levy structure that, as PwC has noted, generates close to R100 billion a year for the fiscus and is rarely reduced once restored to full strength. The result is that South Africans are absorbing an international oil shock and a full domestic tax reinstatement simultaneously, with no remaining cushion between them.
