South African drivers can expect some financial relief at the petrol station next week, as petrol prices are anticipated to dip thanks to falling global oil prices and a stable rand.However, diesel users aren’t likely to share in that relief, with a notable price increase expected in August due to global supply constraints.

The jump in diesel prices is largely attributed to a shortage triggered by a series of refinery shutdowns and maintenance outages across both the United States and Europe. These disruptions have restricted the flow of diesel into the global market, tightening supply chains.

The Central Energy Fund (CEF), which monitors international oil trends and the rand-to-dollar exchange rate, has projected the following fuel price adjustments for August:

• Petrol 93: Down by 28 cents per litre
• Petrol 95: Down by 24 cents per litre
• Diesel 0.05%: Up by 66 cents per litre
• Diesel 0.005%: Up by 65 cents per litre

The recent dip in oil prices has been influenced by progress in U.S. trade discussions with various global partners. Importantly, there’s been no escalation in tensions with China— the world’s second-largest economy— which has helped buoy hopes for global economic growth.

Trade talks between the U.S. and the European Union have also moved into their second week, suggesting a willingness to find common ground. Nevertheless, there remains a looming threat of 30% tariffs on EU exports to the U.S., set to take effect on August 1, unless a formal agreement is reached.

This lingering uncertainty is causing some investors to forecast a drop in future oil demand. Concerns about long-term global trade impacts are also contributing to the decline in oil prices, with traders holding back on energy investments.

Compared to earlier this year, geopolitical risks in the oil-rich Middle East have lessened, and several OPEC member countries have ramped up production, increasing overall supply. These developments have further pressured oil prices downward over the past month.

Despite the broader softening of oil costs, diesel prices are heading in the opposite direction due to specific supply pressures. Refinery closures and disruptions in the northern hemisphere have left diesel markets vulnerable. Just last month, prices surged as conflict between Iran and Israel threatened critical fuel exports from the Persian Gulf. Although that threat has since diminished, supply remains tight.

According to Bloomberg, significant output reductions by heavyweight oil producers like Saudi Arabia and Russia have influenced the market. At the same time, Kazakhstan has boosted production of its lighter-grade Tengiz crude, helping to diversify supply.

Looking ahead, a faster-than-expected increase in OPEC production could help ease some of the diesel supply pressure. Strong refining margins may also incentivize plants to operate at full capacity. However, seasonal risks— such as extreme summer heat and the North Atlantic hurricane season— could disrupt refinery operations and impact U.S. fuel output.

On the currency front, the rand has shown resilience, gaining 1.35% against the U.S. dollar over the past month. This strength comes despite political instability following the dismissal of DA Deputy Minister Andrew Whitfield, which has sparked concerns about the unity of the Government of National Unity (GNU). A firmer rand, however, helps lower the cost of imported fuel, offering some cushion for local consumers.

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