Warning Signs for February Fuel Prices in South Africa

South Africans are bracing for another fuel price hike in February 2025, following three consecutive increases that have already stretched household budgets. According to the latest data from the Central Energy Fund (CEF), both petrol and diesel prices are set to rise significantly, driven by global oil market trends and a weaker rand.

January’s Price Increases

The year started with petrol prices increasing by 12 to 19 cents per litre for 93 and 95 petrol, respectively, while diesel prices rose by 7.50 to 10.50 cents per litre. These hikes were attributed to higher international oil prices in December and the rand’s depreciation against the US dollar.

February’s Expected Increases

Early projections indicate even steeper price hikes for February:

• Petrol 93: Increase of 69 cents per litre
• Petrol 95: Increase of 65 cents per litre
• Diesel 0.05%: Increase of 70 cents per litre
• Diesel 0.005%: Increase of 74 cents per litre
• Illuminating paraffin: Increase of 52 cents per litre

Key Drivers Behind the Hikes

Weakening Rand

The rand has been under pressure, trading at R18.71/$ as of 7 January 2025.

• The US Federal Reserve’s increased inflation forecast for 2025 (from 2.0% to 2.5%) has reduced expectations for interest rate cuts, strengthening the US dollar.
• This dollar strength has made imports, including oil, more expensive for South Africa.

Global Oil Market Dynamics

The international oil market has seen price fluctuations driven by:

• China’s Economic Hopes: Chinese President Xi Jinping’s commitment to boosting economic growth in 2025 has raised expectations of increased oil demand.
• Winter Demand in the West: Severe cold fronts in the UK, EU, and US have spiked demand for heating oil and gasoil.
• Supply Concerns: Ongoing sanctions on Russia and Iran could tighten global supply, while Saudi Arabia has raised oil prices for Asia, reflecting stronger demand.

However, analysts warn of potential corrections, with rising supply from non-OPEC countries and concerns about weak Chinese demand possibly offsetting price gains.

What This Means for South Africans

If the CEF’s projections hold, February’s increases will significantly impact:

• Household Budgets: Higher fuel costs will drive up the price of goods and services reliant on transport.
• Businesses: Transport and logistics companies will face increased operating costs, likely passing these on to consumers.

The South African government and industry stakeholders may need to explore measures to mitigate the effects on consumers.

As the CEF continues to monitor global and local trends, official price announcements are expected later in January. South Africans are urged to plan ahead and conserve fuel where possible.

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