Next month, expected fuel price drop of approximately 50 cents per litre this July, providing much-needed relief for consumers feeling the pinch.
Why Are Prices Dropping?
Economists say that two main factors are causing the expected price drop: lower international oil prices and a stronger South African rand. Eleanor Mavimbela, spokesperson for the Automobile Association (AA), shared that data from the Central Energy Fund (CEF) suggests fuel prices will decrease in July.
How Much Will Prices Decrease?
According to Mavimbela, the expected fuel price drop is:
- ULP95 Petrol: Down by around R1.10 per litre
- ULP93 Petrol: Down by around R1.15 per litre
- Diesel: Down by about 55 cents per litre
- Illuminating Paraffin: Down by about 45 cents per litre
However, she cautioned that these decreases won’t bring prices back to the low levels seen at the beginning of the year.
What’s Affecting the Prices?
International oil prices have been relatively low, especially after a significant drop at the start of the month. Additionally, the exchange rate between the rand and the US dollar also plays a role. If the rand is strong, it helps to keep fuel prices lower.
Expert Opinions
Waldo Krugell, an economics professor at North West University, believes that if Brent crude oil prices stay the same, petrol prices could fall by R1.10 per litre and diesel by 55 cents per litre. He noted that a stronger rand could lead to even lower prices.
Dr. Ntokozo Nzimande, an economics lecturer at UCT, said that the formation of the Government of National Unity (GNU) has strengthened the rand. This means that goods priced in dollars, like oil, will cost less, reducing fuel prices.
Looking to the Future
Johann Els, chief economist at Old Mutual, expects petrol prices to drop by 95 cents per litre at the beginning of July. If the rand stays strong and oil prices remain low, he predicts another price drop in August.
This upcoming decrease in fuel prices is welcoming news for South Africans, providing some financial relief.
