Petrol Price Warning for May: South African Fuel Costs on Knife Edge

South African motorists are facing a volatile month for petrol prices in May, with global markets and domestic politics pushing prices in opposite directions.

While global oil prices have dropped significantly, offering some relief, the weak rand—driven by local political turmoil—could wipe out those gains, economists warn.

Oil vs Rand: A Tug of War

According to current estimates:

• Oil price over-recovery: 16c to 52c per litre

• Exchange rate under-recovery: Around 20c per litre

If markets remain steady—an unlikely scenario—diesel prices could drop by around 30 cents per litre, while petrol prices may stay flat. However, any major political shift could quickly derail this outlook.

“A weaker rand will raise fuel prices and the cost of living,” warned Annabel Bishop, Chief Economist at Investec.

Political Instability Adds Pressure

South Africa’s Government of National Unity (GNU) is in crisis after the ANC and DA clashed over the recent budget vote. The DA’s rejection of the budget and the ANC’s scramble for support outside the GNU has triggered uncertainty in local and international markets.

The result? The rand remains stuck above R19.30/$, when it could have pushed below R17.50/$ under more stable conditions.

“If the DA exits the GNU or is replaced with more left-leaning parties, the rand could hit R21.00/$,” Bishop said, warning of a worst-case scenario.

Global Forces at Play

The backdrop of global market volatility is compounding South Africa’s woes:

• Oil prices dropped below $65 a barrel, a four-year low, due to:

  • A global tariff war led by US President Donald Trump

  • Weaker demand expectations amid recession fears

  • A surprise output hike by OPEC+

• While oil prices have slightly rebounded, futures remain significantly lower than March, contributing to an over-recovery on fuel pricing—which would typically help lower prices locally.

However, Trump’s trade war has also caused instability in emerging markets, with investors pulling money into safe-haven assets, further weakening currencies like the rand.

What It Means for Drivers

If the current balance holds:

• Diesel prices could fall by ~30c/litre

• Petrol prices could remain stable

But if the GNU collapses, and the rand weakens further, motorists can expect sharp increases in fuel costs, adding to the broader cost-of-living pressures already squeezing households.

For now, South African drivers are in limbo—caught between global relief and local risk. May’s fuel prices will be determined as much by the political chessboard in Pretoria as by oil markets in New York and OPEC meetings in Vienna. One thing is certain: this month’s price forecast is anything but certain.

{Source BusinessTech}

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