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Based on the current oil, international fuel and rand prices, the latest data from the Central Energy Fund (CEF) shows that the price of 95 unleaded petrol could be cut by around 76c a litre in January. Wholesale diesel prices could be lowered by around R1.34 to R1.41 a litre.
"These decreases will go a long way to alleviating the fuel price burden – and its associated impact on other prices – felt by millions of South Africans," " says the Automobile Association (AA). "For many travellers who will be going on vacation this is also good news as it will undoubtedly reduce expenses on the return leg of their journeys."
However, there is still more than two weeks to go before the final prices are set. Fuel prices will only be adjusted on 3 January.
South African fuel prices are largely determined by international oil costs and the rand exchange rate, as oil is priced in dollars.
The price of Brent crude oil traded close to $83 a barrel at the start of December but has since fallen to around $75.
Bloomberg reports that oil is now down by more than a quarter from a high reached in September on a surge in exports from non-OPEC countries and fears that fuel demand is worsening. A limping Chinese economy is a big concern.
"In addition, the market is skeptical whether deeper voluntary supply cuts by the Organisation of Petroleum Exporting Countries (OPEC) and its allies will be fully adhered to," Bloomberg reports.
And after spiking to almost R19.14/$ recently, the rand rallied to R18.60 on Thursday after the Federal Reserve indicated on Wednesday that the interest-rate hike cycle has come to an end and cuts are coming in 2024.
If the current fuel price cuts pan out, it will be the third consecutive month of decreases.
At the start of December, the price of Gauteng 95 petrol was reduced by 65c to R23.25 a litre, while the coastal price was cut to R22.53 - the lowest prices since August.
Wholesale diesel was lowered by more than R2.30 to R21.82 a litre in Gauteng and R21.09 on the coast, also the cheapest since August.
