July brings fuel price relief for South African motorists
South African motorists may see significant fuel price reductions in July, contingent on international oil prices and the reinstatement of fuel taxes.
Image: Graphic: Nicola Mawson | Pexels & Pixabay | IOL
South African motorists may see significant fuel price reductions in July, contingent on international oil prices and the reinstatement of fuel taxes
This comes after the truce signed by the US and Iran last week caused international oil prices to subside.
However, assuming that the truce holds, and that the crucial Strait of Hormuz choke point remains open, much of the relief might only be seen in August fuel prices.
The latest daily report from the Central Energy Fund shows petrol price over-recoveries of between R2.93 (95 Unleaded) and R2.97 (93 Unleaded), while diesel is in the green by between R4.60 (500ppm) and R5.02 (50ppm).
But there is an unfortunate caveat. This comes in the form of the fuel tax reprieve, which ends in July, adding R1.50 back into the fuel price calculation. The fuel tax relief measure initially totalled R3.00 in April, but it was halved at the beginning of June. After it falls away completely from July 1, South Africans will once again be paying the full R4.10 per litre General Fuel Levy.
With this factored in, July’s petrol price cut could be reduced to just R1.50, and diesel to around R3.10 to R3.50. However, if the slate levy is adjusted lower than its current level of R1.58, this could mitigate the tax reinstatement to a degree. In theory, a sustained fall in international oil prices can lead to a lower slate levy over time, as this mechanism primarily compensates oil companies for price volatility in the preceding months.
It’s been a tough year for South African motorists and commuters, with petrol prices having risen by R7.72 since April, while diesel has increased by up to R10.16.
For the record, a litre of 95 Unleaded petrol currently costs R27.19 at the coast and R28.06 in Gauteng, where the cheaper 93 grade retails for R27.95.
The wholesale price of 50ppm diesel currently stands at R27.88 at the coast and R28.75 inland.
While significant price cuts could be on the cards for July, depending on the slate levy, August could see further relief, with the latest daily over-recovery numbers exceeding the month's average and pointing to further relief down the line. This is assuming that international oil prices hold below the $80 mark - something that most certainly depends on lasting peace in the Middle East.
