Fuel Prices to Rise by Up to 65c as Geopolitical Tensions Push Costs Higher

The department stated that the revisions are based on prevailing global crude oil prices, international refined product trends, geopolitical developments, and exchange rate movements during the period under review.

The Department of Mineral and Petroleum Resources (DMPR) has announced fuel price increases ranging between 20 cents and 65 cents per litre, effective from Wednesday. The adjustments affect petrol, diesel, illuminating paraffin, and liquefied petroleum (LP) gas, reflecting a combination of international oil market movements and local currency fluctuations.

The department stated that the revisions are based on prevailing global crude oil prices, international refined product trends, geopolitical developments, and exchange rate movements during the period under review.

Breakdown of Fuel Price Adjustments

The following price increases will come into effect:

• Petrol 93 (ULP and LRP): 20c per litre increase

• Petrol 95 (ULP and LRP): 20c per litre increase

• Diesel (0.05% sulphur): 62c per litre increase

• Diesel (0.005% sulphur): 65c per litre increase

• Illuminating Paraffin (wholesale): 44c per litre increase

• Single Maximum National Retail Price for Illuminating Paraffin: 58c per litre increase

• Maximum Retail Price of LP Gas: 23c per kilogram increase (26c per kilogram increase in the Western Cape)

The sharper increases in diesel and paraffin are expected to have broader economic implications, particularly for transport-intensive sectors and low-income households reliant on paraffin for energy needs.

Brent Crude Oil Price Increase

According to the DMPR, the average Brent Crude oil price rose from 64.08 USD to 69.08 USD during the review period. The increase was attributed to higher global shipping rates and geopolitical uncertainty, particularly tensions between the United States and Iran.

The department noted that escalating tensions could potentially disrupt crude oil supply through the Strait of Hormuz, a critical global oil transit route. Such risks have contributed to upward pressure on international oil prices.

As a result, the higher crude oil prices translated into increased international refined product prices, pushing up the Basic Fuel Price (BFP) components as follows:

• Petrol: increase of 37.53 cents per litre

• Diesel: increase of 81.36 cents per litre

• Illuminating Paraffin: increase of 63.81 cents per litre

In addition, propane and butane prices rose due to colder weather conditions in the Northern Hemisphere and tighter global supply, contributing to the LP Gas price adjustment.

Rand Strengthening Offers Partial Relief

While international oil prices exerted upward pressure, the Rand strengthened against the US dollar during the same period, moving from R16.31 to R16.00 per USD.

This currency appreciation helped to partially offset the global price surge, contributing:

• 16.96 cents per litre to petrol prices

• 19.20 cents per litre to diesel prices

• 19.21 cents per litre to illuminating paraffin prices

The strengthening Rand mitigated what could have been even steeper increases, though it was insufficient to fully neutralise the impact of higher crude and refined product prices.

Economic Implications

Diesel price hikes are particularly significant, given diesel’s central role in freight transport, agriculture, mining, and industrial production. Higher diesel costs typically filter through supply chains, potentially affecting food prices and general inflation.

Similarly, increases in illuminating paraffin prices disproportionately impact lower-income households that rely on paraffin for cooking and heating.

The latest adjustment underscores South Africa’s exposure to global energy market volatility and geopolitical developments, despite exchange rate fluctuations providing some cushion.

With fuel prices remaining closely tied to international oil markets and currency performance, further movements will depend on global geopolitical stability, crude oil supply dynamics, and domestic economic conditions.