Big petrol price drop tipped for July

24 June 2024 | Economic factors

By: Yogashen Pillay – The Mercury

Economists are predicting a big drop in petrol and diesel prices next month, saying it will bring much-needed relief to under-pressure consumers.

Experts have attributed the drop to relatively low international oil prices and a strong rand.

Eleanor Mavimbela, Automobile Association (AA) spokesperson, said unaudited mid-month fuel data from the Central Energy Fund (CEF) is indicating a decrease in all fuels prices in July.

“Based on the current data, ULP95 is showing a decrease of around R1.10c/litre, while ULP93 is indicating a decrease of around R1.15c/l. Diesel is again edging towards a decrease of 55c/l and illuminating paraffin is showing a decrease of around 45 c/l.”

But Mavimbela added that the decreases would not move the price of fuel to the relatively low levels seen at the beginning of the year.

“At this stage of the month, the numbers are more reflective of the way the fuel prices are likely to move when they are adjusted for July. Currently, the trajectory indicates that all fuels will be cheaper in July.”

Mavimbela said international product prices remain relatively low, with the price of global oil dropping significantly at the beginning of the month.

“The impact of the average rand/US dollar exchange rate for the reporting period must also still be fully factored in, which may move fuel pricing either way.”

Waldo Krugell, an economics professor at North West University, said if the Brent crude price stays at current levels the petrol price will fall by R1.10/l and diesel price by 55c.

“It is difficult to predict: the markets have been positive about the Government of National Unity and the rand might strengthen further, which will reduce the fuel price (more).”

Dr Ntokozo Nzimande, senior lecturer in economics at the UCT, said the markets had welcomed the formation of the GNU.

“This is reflected in the strong performance of the rand against other currencies, implying that dollar-priced goods, such as oil, will cost less. As a result, I expect fuel prices to ease, reducing the pressure on motorists and households in general.”

Johann Els, chief economist at Old Mutual,said: “My forecast is the petrol price will fall by 95c/l at the beginning of July. If the rand continues to perform well and the international oil price continues to remain low, I'm expecting another decrease (in) August.”

The Mercury