South African motorists will see mixed fuel price adjustments next week, with decreases for diesel and Petrol 95 offsetting a smaller-than-expected increase for Petrol 93, according to Central Energy Fund (CEF) data.
The shifts (see previous report), driven by a weaker US dollar and declining global oil prices, offer cautious relief after months of steep hikes.
March Fuel Price Adjustments
The final CEF projections for March 2025, effective Wednesday, March 5, are as follows:
- Petrol 95: 4-cent decrease per litre (coastal price: R21.62; inland: R22.45).
- Petrol 93: 9-cent increase per litre (down from an 11-cent forecast earlier this week and an 18-cent under-recovery last week).
- Diesel 0.05% (wholesale): 14-cent decrease per litre.
- Diesel 0.005% (wholesale): 20-cent decrease per litre.
- Illuminating paraffin: 4-cent decrease per litre.
Diesel users will see the most significant relief, while Petrol 93’s hike remains a fraction of initial estimates.
Currency and Oil Prices Driving Changes
According to Investec chief economist Annabel Bishop, the primary driver behind the fuel price shifts is the weaker US dollar rather than inherent rand strength. The rand/dollar exchange rate has contributed to a 13 to 14 cents per litre over-recovery in pricing, while fluctuations in global oil prices have further influenced fuel costs.
“The US dollar has weakened since mid-January, once the economic advisors of the incoming Trump administration had said they recommended a modest tariff regime, and not universal tariffs or other measures causing high inflation,” Bishop further noted.
This shift has raised the probability of a second US interest rate cut this year, increasing market optimism. However, Bishop cautioned that Trump administration policies could still disrupt these expectations.
Despite domestic uncertainties, including the delayed 2025 Budget announcement and the return of stage 6 load shedding, Bishop noted that investors have largely shrugged off these concerns. “Investors are used to load shedding in South Africa and weak growth outcomes,” she said, emphasising that international market trends are currently the dominant force influencing the rand.
Oil Prices Decline on Weaker Demand and Supply Surplus
Crude oil prices have also played a pivotal role in fuel price movements. Oil has dropped to around $72 per barrel, down from $75 at the start of February, marking a significant decline.
Bianca Botes, director at Citadel Global, attributes the dip to a surprise rise in US fuel inventories, which has increased supply while global demand remains weak.
Market analysts warn of a possible oil glut, with rising US production outpacing demand. This is partly due to Trump’s trade policies, including potential tariffs on Canada, Mexico, and the European Union, which have kept oil futures at low levels.
Bloomberg analysts noted: “That anxiety has eclipsed the possible lifts from tighter sanctions against Iran and the likelihood OPEC+ will again delay the restart of shuttered production.”
Adding to the uncertainty, financial markets strategist Terence Hove pointed to the possibility of a Russia-Ukraine peace deal, which could lead to sanctions on Russian oil being lifted. If this happens, more Russian oil would enter the market, further pushing prices down.
“The market could also remain exposed over the longer term to US crude production policies, potential trade tensions, and OPEC policy changes. The resulting higher production and weaker global growth could drive market prices to the downside,” Hove said.
Minimal Relief in Context
While the cuts are marginal compared to February’s 82-cent petrol hike and R1.05 diesel surge, they mark the first reprieve after four consecutive monthly increases. Since November 2024, cumulative petrol hikes exceed R2.00 per litre in some regions.
What’s Next?
The Department of Petroleum and Mineral Resources will confirm adjustments early next week. Analysts urge caution, citing risks such as:
- OPEC+ supply decisions (e.g., delaying restarted production).
- US trade policy volatility under Trump’s potential tariff regime.
- Geopolitical shifts, including Russia-Ukraine negotiations.
For now, diesel users can welcome the steepest cuts, while Petrol 93 motorists face a milder blow than initially feared. As global forces dominate pricing, South Africans remain at the mercy of international markets—but for March, at least, the news isn’t all bad.
