Guiding consumers since 2009

Potential petrol price decrease at the end of the month

By Danielle van Wyk

According to the latest Automobile Association (AA) report, commenting on unaudited mid-month data released by the Central Energy Fund (CEF), consumers can rest easy as the rand resilience and a declining oil price have set the scene for a further fuel price drop.

“The current picture suggests that road users could be looking at a petrol price decline of between 60 and 64 cents a litre at month end, with diesel showing a 60 cents reduction and illuminating paraffin 57 cents. This as the rand remained mostly stable against the US dollar in the first half of June, with strength in the currency contributing three cents a litre to the drop," the AA stated.  

The big move came from oil, which managed to snub the Organization of the Petroleum Exporting Countries (OPEC's) production quotas to drop by an estimated 8% since the start of the month.

The AA said that the fuel price will come under pressure if the three major ratings agencies downgrade rand-denominated debt to junk status in future reviews of South Africa's sovereign credit ratings.

"That could trigger substantial capital outflow, almost certainly leading to rand weakness which will be heavily negative for the fuel price," said the AA.  

"Barring unexpected political or economic shocks in the lead-up to the next ratings reviews, we expect fuel price movements to mainly depend on international petroleum prices," the Association concluded.

 Handy tip: Are you struggling to pay for transport costs and other monthly obligations? You may benefit from debt counselling. Justmoney has partnered with DebtBusters, South Africa’s biggest debt counselling service. You can apply for debt counselling here.



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