CEF data shows a massive fuel price hike in June.
By Lehlohonolo Lehana.
Mid-month data from the Central Energy Fund points to major fuel price pain for diesel and petrol vehicle owners in June.
The data, which serves as a snapshot of market conditions as of 13 May 2022, shows that the petrol price could increase by as much as R1.98 per litre in May, while diesel is showing an under-recovery of between R1.60 and R1.63.
The mid-month snapshot is as follows:
- Petrol 95: under-recovery/increase of 198 cents per litre;
- Petrol 93: under-recovery/increase of 193 cents per litre;
- Diesel 0.05%: under-recovery/increase of 163 cents per litre;
- Diesel 0.005%: under-recovery/increase of 160 cents per litre;
- Illuminating Paraffin: under-recovery/increase of 215 cents per litre.
The Department of Energy has stressed that the daily snapshots are not predictive and do not cover other potential changes like slate levy adjustments or retail margin changes, which are determined by the department at the end of the month, taking all variables into account.
The Department of Energy makes adjustments based on a review of the whole period. Furthermore, the outlook can change significantly before month-end.
The prices reflected in the under-recoveries exclude the government’s fuel price interventions from April 2022, which are expected to lapse at the end of the month.
This means that motorists could see the return of R1.50 per litre to the general fuel levy. This could see an increase of as much as R3.48 for petrol – though this is subject to change, following any government announcements between now and the end lof the month.
Fuel prices are affected by two main components – the rand/dollar exchange rate and changes to international petroleum product costs, primarily driven by oil prices.
Both the local rand/dollar exchange rate and movements in global oil prices are being driven by weak economic data out of China.
China’s industrial output and consumer spending hit the worst levels since the pandemic began, hurt by Covid lockdowns. The risk of an economic downturn amid price pressures and rising borrowing costs remains the major worry for markets.
The outlook for China dragged down general market sentiment, with emerging market currencies coming under pressure, according to Citadel Global.
Markets are also anticipating a 25 or 50 basis point hike in rates coming out of the SARB’s Monetary Policy Committee later this week.
While spending most of April below R15 to the dollar, the rand has pushed past R16 to the dollar in May, contributing R1.00 to R1.10 to the under-recovery in fuel prices.
Oil meanwhile, was also dented by the Chinese figures but is holding at around $110 a barrel – the same levels seen at the end of April.
While relatively stable, these costs are still extremely high, with international product prices reflecting the ongoing war in Ukraine. These persistent price issues are contributing close to another R1 to local fuel price under-recoveries.
German foreign minister Annalena Baerbock said she expects the European Union to impose sanctions on Russian oil within the next few days, which will further impact Brent Crude prices.