Rand puts a damper on June fuel price relief
SOUTH Africans were looking set for significant petrol and diesel price cuts of well over R1 a litre next month, but a weak rand has put a damper on the prospects.
However, thanks to weaker international oil prices this month, the prices of petrol and diesel look set to come down in June, albeit by less than R1.
The latest daily snapshot from the Central Energy Fund shows an average over-recovery of 97 cents a litre for the month, for both grades of petrol. However, due to the weak currency, the number is descending daily. If circumstances persist between now and monthend, the decrease will probably fall somewhere around the 70c mark.
It’s a similar story with diesel prices which, earlier this month, looked poised for a R1.50 reduction. However, the average over-recovery stands at R1.03 for 50ppm. If the trends persist, that will probably decline to around 80c or less.
Fuel prices are adjusted on the first Wednesday of each month, so South Africans will have to wait a bit longer than usual for next month’s reductions, which are due on June 7.
Were it not for the weak rand, petrol and diesel prices would have been poised for reductions of around R1.35 and R1.45 respectively, as oil prices have fallen this month. Brent crude was trading around the $75 to $76 mark at the time of writing, after trading in the $82 to $85 range for most of April.
However, the rand remains stuck well north of the R19 to the US dollar mark, trading at $19.28 at the time of writing. Consider that last month’s average was $18.13.
The local currency saw a significant sell-off earlier this month, due to a “perfect storm” of factors, says Reuters.
These included accusations that South Africa sold weapons to Russia, which could lead to economic sanctions, as well as crippling load shedding.
Nonetheless, June’s fuel price reductions, and particularly that of diesel, will cut at least some slack for South Africans struggling under high inflation.
The lower diesel prices, following from May’s reduction of 73c for 500ppm should also help slow general inflation as goods transportation costs are linked to the fuel type.
The wholesale price of 500ppm stands at R19.43 at the coast and R20.15 inland, keeping in mind that retail prices, which vary between outlets, will be higher than that.
95 Unleaded petrol retails at R22.62 at the coast and R23.34 inland, where the cheaper 93 ULP sells for R23.01.
Petrol remains expensive in historical terms, considering that a litre of 95 Unleaded cost R18.89 at the beginning of 2022 and R14.16 in January 2021.