Petrol price joy turns to heartbreak in SA
Following a large swing in diesel prices in South Africa, petrol prices have now also moved into an over-recovery, but drivers can still expect a hike at the pumps next week.
This is because the National Treasury’s fuel levy relief will start being phased out from June, reversing the recovery trend and pushing petrol prices back into the red.
According to the latest data from the Central Energy Fund (CEF), petrol price recoveries have finally turned positive.
Having started the month with an under-recovery of around 85 cents per litre, petrol prices are now showing an over-recovery of between 3 and 8 cents per litre.
While this is a small over-recovery, it’s the first positive recovery after three consecutive months of steep increases.
These are the recoveries at mid-month
- Petrol 93: decrease of 8 cents per litre
- Petrol 95: decrease of 3 cents per litre
- Diesel 0.05% (wholesale): decrease of R5.02 per litre
- Diesel 0.005% (wholesale): decrease of R4.26 per litre
- Illuminating paraffin: decrease of R5.21 per litre
Unfortunately, the over-recovery is nowhere near big enough to offset the coming reintroduction of R1.50 per litre to petrol prices.
This will be coming as the National Treasury starts terminating the R3.00/litre fuel levy relief it introduced in April.
From June, R1.50 per litre will be added back, with the full relief terminating in July, when the remaining R1.50 will be added.
This will take the small cut on the cards for petrol and turn it back into another huge increase.
At the current recoveries, with the fuel levy added back at 50%, petrol prices are still expected to rise by over R1.40 per litre next week.
A more positive outcome is on the cards for diesel users, where the over-recovery is so large that it can easily absorb the return of the fuel levy.
At current recoveries, taking the 50% fuel levy of R1.97 for diesel will keep prices in the black, with a R2.30-R3.00 cut still expected.
Some economists have posited that the steep over-recovery might prompt the National Treasury to take advantage and reintroduce the full levy (R3.93 per litre).
Even in that case, the recovery is big enough to fully absorb it, still yielding a 33-cent to R1.09 per litre cut at the pumps in June.
The table below outlines how the June fuel prices could be impacted by their return.
| June projections | (Under)/Over recovery Mid-month | 50% Fuel tax added back in June | 100% Fuel tax added back in June | Projected change |
|---|---|---|---|---|
| Petrol 93 | R0.08 | (R1.50) | – | (R1.42) |
| Petrol 95 | R0.03 | (R1.50) | – | (R1.47) |
| Diesel 0.05% | R5.02 | (R1.97) | – | R3.05 |
| Diesel 0.005% | R4.26 | (R1.97) | – | R2.29 |
| Diesel 0.05% | R5.02 | – | (R3.93) | R1.09 |
| Diesel 0.005% | R4.26 | – | (R3.93) | R0.33 |
Markets flat
Petrol price recoveries have moved to a relatively neutral position on the back of a resilient rand, and oil prices are trading in a narrower range around $100 a barrel.
Because of this stability—at least, relative to previous months—recoveries have moved away from the steep under-recovery shocks in April and May.
This relative stability has continued, with the rand starting the week trading on the stronger side of its range on Monday (25 May) at R16.36 against the dollar.
The rand’s stronger position has been supported by easing oil prices. Local markets are also on watch for the Reserve Bank’s interest rate decision later this week.
Economists at Nedbank expect the monetary policy committee to raise interest rates by 25 basis points, taking the repo rate to 7%.
“Our analysis suggests that inflation expectations are particularly sensitive to petrol price increases, and we therefore see a relatively high risk of second-round effects,” the bank said.
“As such, tightening monetary policy now would ensure that the inflationary consequences of the supply-side shock are temporary and likely minimise the need for more severe tightening later in the cycle.”
Regarding oil markets, oil prices hit two-week lows on optimism that the US and Iran were moving closer towards a peace deal, even though both countries remained at odds over key issues.
On Saturday, US President Donald Trump said Washington and Iran had “largely negotiated” an understanding on a peace deal that would reopen the Strait of Hormuz.
The strait, which carried a fifth of global oil and liquefied natural gas shipments before the conflict, has been closed for months, driving up fuel prices.
The next fuel price changes will kick in from Wednesday, 3 June 2026. The Department of Mineral and Petroleum Resources will announce the official changes before then.
