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South Africa Set for Welcome Fuel Price Drops Next Week, says AA

Published December 29, 2023
7 months ago

In a piece of welcome news for motorists across South Africa, the Automobile Association (AA) has indicated that a reduction in fuel prices is on the horizon. According to the unaudited mid-month data from the Central Energy Fund (CEF), consumers can expect to see a decrease in the prices of petrol, diesel, and illuminating paraffin when the Department of Mineral Resources and Energy makes its official price adjustment next Wednesday.

Detailing the expected changes, petrol users who rely on ULP95 can anticipate a drop of roughly 54 cents per liter, while ULP93 should see a decrease of about 39 cents per liter. Diesel users will benefit from an even more substantial reduction, with prices expected to decrease by between 94 cents and 1.02 rand per liter. Alongside these, the price of illuminating paraffin is also slated to go down by nearly 95 cents per liter.

The forecasted price decreases come after a period of instability, which saw oil prices surge due to disruptions to shipping routes in the Red Sea caused by Houthi rebel attacks. However, with the situation easing and some major shippers resuming their passages through the critical Suez Canal and Red Sea shipping lanes, oil prices have begun to stabilize.

While concerning fluctuations in the value of the rand against the US dollar and global economics continue to exert pressure, the main impetus behind the expected fuel price cuts remains the global decline in oil costs. The average rand/US dollar exchange rate has played a modest part in this positive trend, but the association cautions that the cost of fuel, even after the decrease, will remain higher than it was in January 2023.

The AA expresses a note of caution despite the optimistic outlook for January. With the current geopolitical climate continuing to influence international oil prices, they note that it is still early to predict whether this downward trend will carry on throughout the year.

The AA has persistently voiced concern over the general high fuel prices and their impact on consumers, particularly in light of the steep increases experienced in September and October of the previous year. As the new year begins on a positive note, the Automobile Association reiterates its call for the government to undertake a transparent review of the country's fuel pricing structure. This step is critical in finding a sustainable solution to the ongoing issue of fuel cost escalation, without which South Africans will continue to be subject to unpredictable and often crippling price hikes.

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