Consumers have been given a slight boost just ahead of the festive season as the official fuel price for November will decrease, barring LP Gas.
On Monday, the Minister of Mineral Resources and Energy, Gwede Mantashe announced the fuel price adjustments for the coming month.
The department said that both grades of petrol, 93 and 95 ULP and LRP will decrease by R1.78c per litre, while diesel (0.05% sulphur) will come down by 85c per litre, and diesel (0.005% sulphur) will decrease by 82c per litre.
Illuminating paraffin will decrease by R1.30 per litre with the only increase for the month being LP Gas retail price, which will go up by R1.49c per litre.
The country’s fuel prices are adjusted monthly, informed by international and local factors.
International factors include the fact that South Africa imports both crude oil and finished products at a price set at the international level, including importation costs, such as shipping costs.
The department said that the main reasons for the fuel price adjustments are due to average Brent crude oil price decreasing from $91.86 (R1723.39) to $88.72 during the period under review.
The decrease in the oil price was attributed to the rise in global crude oil inventories because of increased production from non-OPEC + producers. The lifting of sanctions on Venezuela by the US, created a positive outlook on supply and the low impact of the Israel-Hamas conflict as it has not yet affected the flow of crude oil, despite it taking place in the oil rich region of the Middle East.
The local currency, the rand, depreciated slightly on average, against the US Dollar (from R19.00 to R19.08 per US dollars) during the period under review when compared to the previous one.
“This led to higher contributions to the Basic Fuel Prices of petrol, diesel and illuminating paraffin by 6.34 c/l, 7.57 c/l and 7.61 c/l, respectively,” the department stated.
“The cumulative slate balance on petrol and Diesel at the end of September 2023 had a negative balance of R6.2 billion. Therefore, the slate levy will increase by 21.92 c/l to 52.62 c/l. This will be implemented in the price structure of petrol and diesel with effect from 1 November 2023,” the department said.
Fuel prices differ from the coastal regions of the country to the inland areas.
Inland consumers will pay R23.44 for a litre of 93 Unleaded petrol and R23.90 for 95 Unleaded, while those at the coast will pay R23.18 for the 95 Unleaded.
The wholesale price of 500ppm diesel is now R23.44 at the coast and R24.16 inland, while 50ppm is pegged at R23.69 and R24.40 in the respective zones.
The Automobile Association (AA) said that South Africans could breathe a sigh of relief with the fuel price decreases.
Ahead of the official announcement of the fuel prices, the AA said, “These significant decreases will come at a very critical time for South Africans, who have had to dig deeper into their pockets to fill up their vehicles and food trolleys with the previous cycles of fuel increases.”
“The outlook for November will offer some much-needed relief to consumers, especially with the decrease of diesel, which is a big input cost in major sectors such as agriculture, mining, and manufacturing, and an increase here often contributes to increased prices of basic commodities,” the AA added.
Frank Blackmore, the lead economist at KPMG, told Business Report that during the month of October, there was an over recovery in fuel prices which led to the price cuts.
He said, “The reason for this reduction is that the international product price decreased over time, while the exchange rate moved in the opposite direction, and depreciated slightly, which resulted in a net gain.”
“This will be a large relief for customers as we close out the year, and as we move into the holiday season, it could potentially assist in the reduction of inflation over time which will help to bring down interest rates on the back of lower inflation, which will be a good thing to boost growth in the new year,“ Blackmore said.
BUSINESS REPORT