Petrol Prices Set for a Welcome Dip Next Week: What You Need to Know

In a welcome relief for South African motorists, petrol prices are expected to decrease next week, thanks to a weaker dollar and lower global oil prices. According to the latest data from the Central Energy Fund (CEF), petrol 95 is set for a small cut of 4 cents per litre, while diesel prices are expected to drop by between 14 and 20 cents per litre. Even illuminating paraffin is showing a decrease of 4 cents per litre.

However, it’s not all good news. Petrol 93 remains the outlier, with a slight increase of 9 cents per litre. While this is still an under-recovery, it’s a significant improvement from the 18 cents per litre hike projected at the end of last week.

What’s Driving the Changes?

The primary driver behind the price adjustments is the weaker US dollar, which has been trading lower since mid-January. This, combined with a dip in global oil prices, has pushed fuel price recoveries into positive territory for most fuel types.

According to Investec chief economist Annabel Bishop, the rand’s recent performance is more a result of dollar weakness than rand strength. The Trump administration’s push for a “modest” tariff regime has also played a role, reducing the likelihood of universal tariff hikes that could have driven inflation higher.

Bishop notes that the probability of a second US interest rate cut this year has increased, which could further influence global markets. However, she cautions that the Trump administration’s policies remain unpredictable and could counter these trends.

Oil Prices and Global Factors

Oil prices have also seen a significant decline in February, dropping from above $75abarreltoaround$72. Bianca Botes, director at Citadel Global, attributes this to a surprise rise in US fuel inventories and a projected glut in the market.

Bloomberg analysts add that President Trump’s threats of tariffs on Canada, Mexico, and the European Union have kept oil futures trading at low levels. While the timing of these tariffs remains unclear, the uncertainty has overshadowed other factors, such as tighter sanctions against Iran and OPEC+ production delays.

Local Challenges Remain

Despite the positive news on fuel prices, South Africa’s domestic challenges can’t be ignored. The recent return of stage 6 load shedding and the postponement of the 2025 Budget have added to the country’s economic woes. However, Bishop notes that investors have largely shrugged off these events, as load shedding and weak growth outcomes are seen as part of the “new normal” in South Africa.

What’s Next?

The Department of Petroleum and Mineral Resources is expected to announce the official fuel price adjustments in the coming days. The new prices will take effect on Wednesday, 5 March 2025.

For now, motorists can look forward to a slight reprieve at the pumps, but as always, global and local factors mean that fuel prices remain a moving target.

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