Huge petrol and diesel price hikes expected in February

South African motorists will be hit with significant petrol and diesel cost increases when the next fuel price adjustments take effect on February 5.

The latest numbers released by the Central Energy Fund are showing significant under-recoveries for both fuel types, pointing to increases of 88 cents for 95 Unleaded petrol and 95 cents for 93 Unleaded, while diesel is looking set for hikes of between R1.08 (50ppm) and R1.11 (500ppm).

This would see 95 ULP petrol rising to around R21.68 at the coast and R22.47 inland, where 93 ULP should land around the R22.54 mark.

However this appears to be the upside scenario at present. With the most recent daily data having moved further into the red, the aforementioned under-recoveries look set to grow between now and month-end, risking increases of R1 or more for petrol, should current trends persist.

Those trends come in the form of inflated oil prices as well as a weaker rand having worsened the outlook since early January, when a petrol price increase of around 68 cents had been predicted.

Brent crude oil prices, which averaged $72.78 (R1,353) in December, have risen steadily through January, hitting the $80 mark on January 11 and peaking at $82 on the 15th. Oil was trading at $79.92 on January 21.

The rand, which averaged R18.11 during the last fuel price review period, has also lost considerable ground, breaking through the R19 mark earlier in January, before recovering to R18.60 later in the month, which is insufficient to soften the blow.

January’s stronger oil prices are largely due to intensified US sanctions on Iran and Russia, as well as seasonal demand due to freezing temperatures in the Northern Hemisphere, according to the International Energy Agency.

Interestingly, the World Bank predicted late last year that oil prices would average around $73 in 2025, providing there is no escalation in Middle East conflict. However, there is currently a great deal of uncertainty over how Donald Trump’s US Presidency will impact international oil prices, and its supply-demand cycles, in 2025.

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