October fuel prices set to hit fresh records as Brent crude edges to $108.06

International oil prices climbed on Tuesday, with Brent crude edging up to $108.06 per barrel, pushing South Africa’s October fuel projections higher and putting motorists on track for fresh record pump prices.

How much more at the pump

The Central Energy Fund’s latest daily snapshot shows potential increases of up to R2.41 for 95 Unleaded petrol in October. The same snapshot indicates diesel could rise by between R2.04 for 500ppm and R2.40 for 50ppm.

Those estimates have moved higher over the past week: the fund’s data a week earlier pointed to increases of R1.92 for petrol and R2.03 for diesel.

Record levels appear likely

According to the current estimates, motorists would pay about R28.30 a litre at the coast and R29.32 for a litre of 95 Unleaded in Gauteng, which would surpass the previous records of R27.19 and R28.06 respectively. The wholesale price of 50ppm diesel is projected in current estimates to rise to at least R31.94, above its previous high of R30.62.

Recent increases and fiscal outlook

These possible October increases follow steep hikes already implemented in September, when both grades of petrol rose by R1.34 a litre and diesel increased by between R2.94 and R3.15.

There appears little expectation of government relief. Responding to a parliamentary question last week, Finance Minister Enoch Godongwana said permanently offsetting these increases through the budget would shift the cost to taxpayers or increase government borrowing.

“Permanently offsetting these increases through the budget would ultimately shift the cost to taxpayers or increase government borrowing,” Godongwana said. “Fiscal policy therefore involves trade-offs: providing additional relief to consumers must be weighed against the impact on other spending priorities, taxation and government borrowing.”

South Africans currently pay a general fuel levy of R4.10 per litre for petrol and R3.93 per litre for diesel.

What’s driving the jump in oil

International oil prices climbed sharply after escalating tensions in the Middle East raised fears of supply disruptions. Brent crude has surged to a four-month high after gaining 9% last week and breaking above the $100 mark for the first time since July.

Events cited in recent coverage include a temporary shutdown of Saudi Arabia’s East-West pipeline after drone attacks, and a merchant vessel struck in the Strait of Hormuz that, according to Iranian authorities, left one person dead and three injured. Reporting also noted Iran now requires vessels to obtain permission before crossing the Strait and is considering service fees; non-compliant ships are regularly targeted by strikes, adding to uncertainty over global supply.

Oman has postponed talks between Iran and Gulf states on the future management of the strategic waterway.

Market views

Market commentators have warned the conflict is keeping a political and security lens on oil prices. Bianca Botes, managing director at Citadel Global, said the market now has a political date attached to the conflict and cautioned about forecasts tied to that timing.

“The forecast deserves scepticism, given that when the campaign began on 28 February, the expectation was that it would only last for a few weeks, but the market now has a political date, attached to a military escalation that has lasted for eight weeks in which no de-escalation has been sought,” Botes said.