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Expected petrol price for November – and it’s not good news

| Economic factors

Mid-month data published by the Central Energy Fund (CEF) shows that petrol and diesel prices in South Africa could be going up next month, following an early month shock for oil and continued pressure on the rand.

The data, which serves as a snapshot of market conditions as of 13 October 2022, shows that the petrol price could climb by 48 cents per litre in November. Diesel, meanwhile, shows a much larger under-recovery – thus potential increase of R1.57 per litre.

The mid-month snapshot is as follows:

  • Petrol 93: increase of 48 cents per litre;
  • Petrol 95: increase of 38 cents per litre;
  • Diesel 0.05%: increase of 154 cents per litre;
  • Diesel 0.005%: increase of 157 cents per litre;
  • Illuminating Paraffin: increase of 571 cents per litre.

The Department of Energy has stressed that the daily snapshots are not predictive and do not cover other potential changes like slate levy adjustments or retail margin changes, which are determined by the department at the end of the month, taking all variables into account.

The DoE makes adjustments based on a review of the entire period. Furthermore, the outlook can change significantly before month-end.

The expected price changes are contingent on current market conditions persisting through the end of the month.

Local fuel price fluctuations are impacted by two main factors – the international price of petroleum products, driven mainly by oil prices, and the rand/dollar exchange rate used in the purchase of these products.

For the first two weeks of October, oil prices have remained below $100 a barrel; however, prices have increased significantly from lows seen at the start of the month. The rand has remained under pressure above R18 to the dollar, contributing to the expected climb in fuel prices.

Exchange rate

The rand has struggled in October along with other emerging market or ‘riskier’ currencies, as investors and traders rush to safer assets amid tighter monetary policies by major central banks.

The local unit hit a 29-month low on Thursday after data showed US consumer prices came in higher than expected, raising further bets of the Federal Reserve delivering another large rate hike next month.

The Fed hiking rates and keeping them persistently high ultimately ripples through other markets – including South Africa.

Despite having to contend with local issues like load shedding, high inflation and low growth, the rand has spent much of 2022 battered to and fro by international markets.

Emerging market currencies, including the rand, are on the back-burner as investors scurry towards the safety of safe-haven assets at times of high economic uncertainty.

Oil price

Global oil prices have remained below $100 a barrel in October to date, but have climbed from a low point of around $83 a barrel at the start of the month.

The market was shaken by an announcement by the OPEC+ that it would cut approximately 2 million barrels from production this year, flooding the market with uncertainty.

While analysts anticipate the actual reduction will be much lower, the announcement was enough to push the price of oil to around $95 a barrel, raising red flags for fuel costs.

On top of the OPEC disruptions, oil prices are also contending with a global slowdown and fears of recession, Bloomberg reports.

Major markets have tightened monetary policy over the last month, dampening demand and slowing down consumption. China, meanwhile – of the world’s largest importers – remains subdued due to its government’s zero-Covid policies.

Cases of Covid-19 have persisted this week, including in Shanghai, in the run-up to the country’s critical twice-a-decade Communist Party Congress.

The ongoing war between Russia and Ukraine also continues to weigh on the sector.


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