Petrol could cost about R30 a litre in October, and the Central Energy Fund’s latest month-end data shows why. Under-recoveries, the gap between what fuel costs to import and what motorists are charged at the pump, stand at R3.12 a litre for 95 petrol and R2.93 for 93, BusinessTech reported.
What the numbers say
An under-recovery means the regulated price is below the actual cost of the fuel, and the Department of Mineral and Petroleum Resources closes the gap in its next adjustment. Diesel is in the same position: wholesale under-recoveries are R2.73 a litre for 0.05% sulphur diesel and R3.13 for 0.005% sulphur diesel. Illuminating paraffin is at R3.38.
Investec chief economist Annabel Bishop expects an increase of about R3.00 a litre. “The petrol price is likely to increase by around R3.00 per litre next week, thanks to the weaker rand and higher oil prices,” she said. Whether that takes 95 petrol over R30 is close. BusinessTech projects the October inland price of 95 petrol at R30.04 a litre, which is September’s price plus the full R3.12 under-recovery, so an extra R3.00 would leave it just under R30. The slate levy is set separately and could still change the result. The official adjustment takes effect on Wednesday 7 October.
How September’s increase was built
The last adjustment took effect on 2 September. According to the department’s statement, petrol rose by 129 cents a litre, 0.05% sulphur diesel by 293.9 cents and 0.005% sulphur diesel by 314.9 cents. The department said the Brent crude price had risen from US$82.37 to US$87.85 a barrel, and that supply shortages linked to the Russia-Ukraine conflict and lower global inventories pushed up international product prices. A stronger rand offset part of the increase.
The statement also set out a change to the slate levy, the charge used to recover a negative balance on the slate account. With the balance at R9.519 billion in the red, the levy on petrol and diesel went to 83.28 cents a litre, up 21.90 cents from 61.38 cents. Forecourt wage increases under the MIBCO agreements added 4.9 cents a litre to petrol.
Oil and the rand
Brent crude is near US$107 a barrel, up from US$87.85 in the September adjustment, and the oil price alone accounts for up to R3.18 a litre of the under-recovery. The rand, at about R16.44 to the dollar, on the weaker side of its recent range, offsets only around four cents a litre. Bishop pointed to tension in the Middle East, saying the conflict is “already spreading to the Red Sea as Yemen’s Houthis block Saudi Arabian ships”.
Inflation and interest rates
Higher fuel prices, Bishop said, could push inflation back up. “The main concern is that higher fuel prices will push CPI inflation back towards 5.0% y/y and could fuel another repo rate hike in South Africa in November,” she said. The Reserve Bank raised the repo rate to 7.25%, effective 25 September, and pointed to fuel as an inflation risk. Its September statement also expects headline inflation to move above 5% in late 2026 and early 2027 because of fuel prices. Markets have priced in two more 25 basis point moves in the United States, in October and December, according to Bishop.
What it costs a business
For a business that runs vehicles, every extra rand a litre goes straight into operating costs. Earlier this month the projected increase was smaller: our report on how October’s fuel hike grew to R2.88 for 95 petrol worked through the cost for a delivery vehicle using 9 litres per 100 km and covering 4,000 km a month. That is about 360 litres of diesel, so an extra R3.00 a litre adds roughly R1,080 a month, or nearly R13,000 a year, for one vehicle. A business with five such vehicles would pay about R5,400 more a month. With the latest data, that estimate is, if anything, a little low. More on the cost pressure is in our Energy & Infrastructure coverage.
