FUEL SHOCK: Why we could not avoid petrol pump prices shooting up above R30 per litre

South African petrol prices will soar past R30 per litre from Wednesday, heralding more pain for motorists and fanning the flames of domestic inflation as US President Donald Trump’s war of choice in Iran continues to roil global oil markets.

Petrol 95 grade will rise by R3.33 per litre to more than R30.25 per litre, while diesel will climb as much as R3.24 per litre, taking its price to more than R35 per litre.

The usual mix was at work here: global oil prices and the rand/dollar exchange rate. The benchmark Brent Crude price averaged more than $101 per barrel in September, the Department of Mineral and Petroleum Resources (DMPR) said in its Monday announcement of the fuel price adjustment.

“The increase is due to the continued US/Iran tensions, uncertainty regarding the flow of oil through the Strait of Hormuz, higher shipping costs and decreasing inventories,” the department said.

Other hotspots are also propelling pump prices. Fighting in Yemen has disrupted Saudi oil exports while the Russian/Ukrainian quagmire is destroying refining capacity.

Meanwhile, the rand’s average exchange rate against the dollar was largely unchanged. A significant appreciation by the rand would have contained the hikes, while a big fall would have made them much steeper.

The rice rises

❖ Petrol 93 (ULP & LRP): 312.000 c/litre increase.

❖ Petrol 95 (ULP & LRP): (333.000 c/litre increase.

❖ Diesel (0.05% sulphur): 284.380 c/litre increase.

❖ Diesel (0.005% sulphur): 324.380 c/litre increase.

❖ Illuminating paraffin (wholesale): 358.000 c/litre increase.

❖ Single maximum national retail price for illuminating paraffin: 477.000 c/litre increase.

❖ Maximum retail price of LP gas: 42.00 c/kg increase and 48.00 c/kg increase in the Western Cape.

The department also said that the state fuel levy had increased by 4.38 cents per litre from 83.28 to 87.66 cents. This followed a big hike last month.

The Treasury has limited fiscal space to offer relief on this front in the face of an economy which contracted in the second quarter and a bleak outlook with few windfalls beyond the mining sector to squeeze more revenue from.

One of the key constraints on domestic economic growth is global economic uncertainty stemming from the Iran war, which is fuelling the pump price hikes.

It’s just bad news all round, with the pedal firmly on the metal for a further acceleration in inflation against the backdrop of a sluggish and slowing domestic economy.

Inflation forecast raised

In its latest MPC statement late last month, the South African Reserve Bank (Sarb) said it had raised its near-term inflation forecasts “... mainly because of higher fuel prices”.

“Headline inflation will likely be above 5% later this year and early next year, before slowing as the fuel shock recedes. We currently expect inflation to be back around 3% towards the end of 2027,” it said.

That means that interest rates will probably climb again before they start falling – an additional burden for South Africa’s hard-pressed consumers and its stumbling economy.

It’s no consolation to South Africans that the pain is spread around the world, with the US and other major markets also experiencing record prices for diesel.

Amid all the uncertainty, one thing is certain: expect long queues at petrol stations on Tuesday. DM