Diesel set for sharp rise in August as Middle East tensions unsettle markets

South African drivers face another diesel shock in August after renewed conflict in the Middle East pushed international oil markets into fresh volatility, forcing petrol price cuts to be postponed, industry data shows.

What the numbers show

Month-end data from the Central Energy Fund currently points to an unchanged price for 95 Unleaded and a five cent decrease for 93 Unleaded. For diesel, the same data indicates increases of between R1.75 for 50ppm and R1.91 for 500ppm.

Why prices are moving

According to IOL, “Any further petrol price cuts have been put on hold as the resumption of hostilities in the Middle East wreaked havoc on oil markets this month.” International oil prices moved sharply in response to fears of supply disruption and then swings in sentiment as diplomatic developments unfolded.

Possible offset: the Slate Levy

The Slate Levy, a mechanism that compensates fuel companies for oil price fluctuations in the preceding month, could alter the final adjustment. According to IOL, “If the Slate Levy sees a significant reduction from the current R1.14 per litre, then a more substantial petrol price reduction could be on the cards.” The levy’s change, however, is not guaranteed.

Official announcement and current pump prices

The Department of Mineral and Petroleum Resources will announce the official petrol and diesel price adjustments for August early next week. Current retail and wholesale prices listed in the data show:

• 95 Unleaded: R25.23 at the coast and R26.11 in Gauteng
• 93 Unleaded: R25.94 in Gauteng
• 500ppm diesel wholesale: R23.91 at the coast and R24.78 inland
• 50ppm diesel wholesale: R24.41 at the coast and R25.16 inland

Recent price movement

The market has already seen sizeable adjustments this month: petrol fell by R2.01 per litre, while diesel decreased by between R3.14 and R3.58 per litre before the latest shifts in oil-market sentiment.

Outlook

According to IOL, “Diesel prices are looking set to shoot up in August.” The final scale of any rise will be confirmed only when the Department of Mineral and Petroleum Resources publishes the official adjustments and any change to the Slate Levy is announced.

“Diesel prices are looking set to shoot up in August.” IOL