News24 | Threat of record fuel prices this October

The petrol price has already increased by about R5.50 this year, and diesel by more than R9 per litre.

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Like a kick to the stomach for an opponent already floored, SA’s economy is in for yet another fuel price shock in October. This could send petrol prices above the all-time record high reached in June, and diesel close to its May record.

According to the latest Central Energy Fund data, increases in all fuel prices in October are inevitable. The extent of the increases depends on movements in international fuel markets and the rand-dollar exchange rate over the next three weeks, up until 1 October, with the prices to be adjusted on Wednesday, 7 October.

However, were prices to change today, 95-octane petrol would become at least R2.05 more expensive, and wholesale diesel prices would go up by between R1.65 and R1.98 per litre.

For 2026 to date, including the September increases, the petrol price has increased by up to R5.51 per litre, and diesel by up to R9.32 per litre.

Should increases of about R2 materialise in October, petrol prices will be at a new record, exceeding the June price of R28.06 per litre for 95-octane in Gauteng and R27.19 per litre at the coast.

Diesel will come close to its May wholesale record price of R31.18 per litre in Gauteng and R30.30 per litre at the coast.

The latest average underrecoveries on fuel released by the Central Energy Fund reflect a massive surge in international fuel prices on the back of more expensive oil.

Brent crude oil – the basis of SA fuel – closed above $100 per barrel on Wednesday for the first time since 23 July. This follows renewed attacks in the Middle East involving Iran, Yemen-based Houthis, and the US.

On Thursday, Brent crude reached an overnight high of $102.19 per barrel and remained above the $100 mark all morning.

Imported fuel prices are not only influenced by oil prices, though, since there has been a marked increase in refining margins, given the restrained refining capacity, especially for diesel. Higher transport costs also factor into fuel prices. All of these are a consequence of the wars both in the Middle East and between Russia and Ukraine.

KPMG economist Frank Blackore noted: “We’ve seen around a 100% increase [in refined fuel prices] over time, while crude has only gone up around 30% over the same period. So, it’s those refined products that are driving much of the pressure.”

The rand, holding in the region of R16 per dollar, currently counters the higher fuel prices by between 15c and 20c per litre.

Apart from the underrecoveries, the slate levy will probably be changed, based on what fuel importers paid for fuel in August. Petrol prices dropped in August, but diesel increased, so the direction of the levy will depend on import volumes.

Higher fuel prices have a multiplying effect on the economy. It increases production costs at farm and factory level, as well as the cost of transporting goods to markets, factories, wholesalers and retailers. Transport costs increase. The extent to which the higher fuel costs are passed on to consumers will impact inflation; higher inflation, in turn, could force the SA Reserve Bank (SARB) to increase the interest rate when the monetary policy committee takes its final two decisions for 2026, at the end of September and November.

According to Anchor Capital economist Lerato Ntuli, the second-quarter contraction of 0.2% in SA’s economy “does not veto a hike on 23 September”. FNB and Wesbank economist Thanda Sithole says the interest rate decision will depend on the extent to which the SARB views inflationary pressures as “temporary or likely to become embedded”.

The SARB will have the benefit of the third-quarter inflation expectation survey released next week by the Bureau for Economic Research, which will indicate whether the self-fulfilling role of expectations is playing out in higher inflation rates.

US inflation data expected on Friday, and the Federal Reserve’s interest rate decision next week, might also be factors in the local decision, since they will impact the rand.

Crude oil’s $100-a-barrel mark “is a psychological level that matters for markets” and raises “costs for businesses and consumers, and ultimately could weigh on economic growth”, Kathleen Brooks, research director at the XTB trading group, told Reuters.

“If inflation data turns out to be in line, or worse, higher than expected, then this is likely to put renewed pressure on risk assets as it would cement expectations of a hike from the [Fed’s] 16 September meeting,” said Forex.com analyst Fawad Razaqzada.

The European Central Bank is widely forecast to hike eurozone interest rates on Thursday.