July fuel prices set to fall but tax rollback will limit savings at the pump

South African motorists can expect lower petrol and diesel prices from Wednesday, 1 July, but the return of much of the government’s temporary fuel tax relief will curb the size of the cuts.

Why prices are falling

Month-end data from the Central Energy Fund shows significant “over-recoveries” for June that point to lower pump prices in July: R3.03 for 95 Unleaded, R3.07 for 93 Unleaded, R4.67 for 500ppm diesel and R5.12 for 50ppm diesel. The Central Energy Fund data follows an easing in international oil prices after a truce deal between the US and Iran earlier this month.

How the tax change limits savings

The government’s temporary fuel tax relief, which was halved in June, ends in July. The general fuel levy will revert to the full R4.10 per litre, meaning an additional R1.50 must be worked back into the fuel price. That tax rollback is expected to substantially reduce the net benefit of the international-price-driven declines.

Estimated impact on pump prices

Based on the over-recovery figures and the tax change, the IOL analysis indicates the petrol price decrease for July could be limited to around R1.53. Diesel relief could be reduced to a decline of between R3.17 and R3.62, depending on grade.

The article notes that if the slate levy is cut from its current R1.58 per litre, that reduction could partly offset the return of the fuel tax, and that a prolonged fall in international oil prices would support such a reduction.

Other expected changes

Illuminating paraffin is projected to fall by around R5.23 per litre.

The official petrol and diesel fuel prices for July will be announced by the Department of Petroleum and Mineral Resources early this week.

Where prices stand now

Current retail and wholesale prices cited in the source are:

• 95 Unleaded: R27.19 per litre at the coast; R28.06 in Gauteng.
• 93 Unleaded: R27.95 per litre inland.
• 50ppm diesel (wholesale): R27.88 per litre at the coast; R28.75 inland.

Recent price movement and near-term risks

Fuel prices have risen sharply since April: petrol up R7.72 per litre and diesel up by as much as R10.16 per litre. The report cautions that renewed volatility in the Middle East over the weekend has raised the risk of higher international oil prices if tensions escalate or crude supplies are disrupted. It also warns that a sustained increase in oil prices, together with any weakening of the rand, could quickly reverse recent gains and push South African fuel prices higher in the months ahead.