Diesel set to spike in August while petrol holds near current levels

South African diesel users face another sharp increase at the pumps in August while petrol prices are expected to remain close to current levels, according to IOL.

What IOL says will happen in August

According to IOL, “Diesel prices are set to spike once again in August.” The report says this outlook follows volatile international oil markets and recent under-recoveries that have pushed costs upward.

Petrol outlook: small changes likely

IOL reports that a snapshot from the Central Energy Fund currently points to petrol price decreases of between 21 cents (95 Unleaded) and 26 cents (93 Unleaded). However, the article adds that “the strong under-recoveries seen over the past week are likely to erode this further by month-end, with our calculations pointing to only marginal decreases in the region of five cents.”

Diesel: larger increases predicted

The piece emphasises a sharper impact on diesel customers. “It is a far harsher reality for diesel customers, with current calculations pointing to increases of between R1.63 (50ppm) and R1.80 (500ppm). These predictions are based on the assumption that the under-recoveries will persist at their current levels.”

Possible range if oil eases

IOL notes a lower increase is possible if international oil prices continue to fall. “Should oil prices continue to retreat, as they have done over the past day, the increases could be in the R1.30 to R1.50 range.”

Wildcard: the Slate Levy

The article highlights the Slate Levy as another variable. “Another potential wildcard is the Slate Levy… 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.”

Overall assessment

Summing up the outlook, IOL says “Although it is difficult to make an accurate fuel price prediction given the recent market volatility, the most likely outcome is that petrol prices will remain close to current levels in August, while diesel will see increases of more than R1.”

Market context

The report attributes the difficult forecasting environment to extreme volatility in international oil prices this month, driven by swings between fears of a Middle East supply shock and hopes for diplomatic de-escalation.