October Fuel Price Increases Still Likely Despite Brent Crude Retreat

The Brent crude oil price has retreated slightly in recent days, but it may not shield South Africans from another round of fuel-price increases at the start of October. The current price is still above $100 per barrel, trading at $101.08 per barrel on Monday.

Data currently points to increases of up to R2.78 per litre for petrol and R3.00 per litre for diesel in South Africa. Mineral and Energy Minister Gwede Mantashe confirmed recently that the government has no immediate intervention planned to cushion households and businesses from rising fuel costs.

Bianca Botes, managing director at Citadel Global, noted that signs of recovering Middle East supply, such as rebounding Saudi exports and Strait of Hormuz flows at a six-month high, outweigh the ongoing Gulf conflict. Gold is also holding firm, while a firmer dollar is sitting near recent highs after last week's Fed rate hike.

According to Dr Lerato Ntuli, economist at Anchor Capital, Brent crude has retreated from around $106 per barrel in mid-September to near $102 per barrel, supported by signs of de-escalation in regional tensions. However, this may not affect October fuel prices much because the monthly fuel adjustment is based on the average daily Basic Fuel Price and exchange rate over the review period.

Ntuli added that most of the month's pricing for October has already been determined, limiting the impact of the recent decline in oil prices. Furthermore, Brent remains materially higher than $87.88 per barrel in the previous review period.