Petrol Up R1.34 a Litre in South Africa From Wednesday
Diesel prices climb by as much as R3.15 a litre from 2 September, with higher international oil prices named as the main driver.
The New Pump Prices
Petrol in South Africa will rise by R1.34 a litre and diesel by as much as R3.15 a litre from Wednesday, 2 September, eNCA reports.
Business Day reports that the new prices take effect at midnight on Wednesday, after being announced by the department of mineral and petroleum resources on Monday.
The increase follows a month in which prices moved in opposite directions. Business Day reports that in August the retail price of petrol dropped by 52 cents a litre, while diesel rose by more than R1.
What Is Driving the Increase
According to the Mineral and Petroleum Resources Department, cited by eNCA, the steep increases are being driven largely by higher international oil prices.
Diesel users face an additional squeeze from global supply constraints. eNCA reports that the situation has been compounded by Russia's ban on fuel exports, which has added further pressure to international supplies.
Two domestic factors are also in the mix. eNCA reports the adjustment includes an increase in the retail margin paid to fuel stations, which the department says is intended to accommodate rising wage costs for fuel station workers, along with a higher slate levy.
How the System Works
South Africa adjusts fuel prices once a month, based on changes in international oil prices and the rand to dollar exchange rate, Business Day reports. Domestic prices lag global oil movements by about a month.
The country is a net importer of oil and petroleum products, which Business Day says makes it particularly vulnerable to swings in the global market.
Business Day reports that the latest estimates from the state Central Energy Fund, which manages energy assets and strategic fuel reserves, had pointed to hefty increases for both petrol and diesel in September.
The Wider Economic Picture
Business Day reports that global oil market turmoil has been triggered by the conflict between the United States and Iran, which is now entering its seventh month and has kept oil prices elevated this year.
The Bureau for Economic Research and Rand Merchant Bank business confidence index slumped eight points to 39 in the second quarter, after two consecutive quarters of gains. Business Day reports the sharpest pullback was in sectors most exposed to household spending, financing conditions and fuel costs.
Absa, in its Economics Weekly report quoted by Business Day, said the third quarter confidence data will be a key pulse check on the private sector mood while fuel costs remain elevated. Analysts cited by eNCA warn the higher fuel prices could feed into the broader cost of goods and services.
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