Market Update: Massive R7 per litre diesel price increase looms for April – Full Analysis

Fuel prices are set for a massive increase in April because of the Iran war.

April Fool’s Day will hit South Africans with anything but a joke when they stop at the fuel station.

With only two more weeks remaining to determine April’s fuel prices, the latest estimate from the Central Energy Fund shows an increase of up to R6.75 per litre for diesel, and on 95-octane petrol a hike of almost R4 per litre.

South Africans who use paraffin regularly are in for a massive shock, too, with the estimated hike currently at R8.53 per litre.

The estimate is based on how much fuel would have to increase if changed today, based on international fuel prices in dollar and the rand-dollar exchange rate.

In addition to the underrecoveries, a 21c per litre increase in fuel levies will also be implemented, which, if nothing improves, will mean an increase of about R7 per litre on diesel and almost R4.20 per litre on petrol.

While the rand has weakened almost 5% since the start of the Middle East conflict on 28 February, the weaker rand currently contributes only between 30c and 44c per litre to the underrecoveries.

The rand is currently trading at R16.91/$, from R15.88 a month ago..

The biggest impact comes from the skyrocketing price of Brent crude oil – the basis for SA fuel – which closed above $100 per barrel on Thursday for the first time since August 2022.

The oversight month for April’s fuel prices ends on 26 March, and prices will increase on Wednesday, 1 April. This leaves exactly two weeks in which the situation can improve or worsen, depending on the Iran-Israel-US war. Iran is blocking the Strait of Hormuz, the only sea passage between the Persian Gulf and the open ocean, along which about 20% of all world oil is usually shipped.

There have been calls on the government to suspend the implementation of the fuel levy increases, or to lower the total levies – currently at R6.37 per litre – at least temporarily, in order to shield farmers, consumers, and the economy in general, from the huge expected increase.

Following a 20c per litre increase in March, 95-octane petrol is sold for R20.30 per litre at Gauteng fuel stations, and for R19.47 at the coast.

Diesel with 0.05% sulphur, of which the wholesale price increased 62c per litre in March, is sold at about R18.34 per litre in Gauteng, and R17.71 per litre at the coast. Retail prices of diesel are not regulated.