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Could Drivers Be In For A Treat?

It looks like South African drivers who use petrol and diesel might be in for a small surprise next month.

Petrol and Diesel prices might go down for a change.

The people who track these things expect petrol prices to go down by about R1.90 per litre, and diesel might be 75 cents cheaper.

‘petrol prices… go down by about R1.90 per litre, and diesel …75 cents cheaper’

If these predictions hold up, it’ll be the first time prices have dropped in a several months. And when petrol prices stay the same or go down there are less excuses for the shops and retailers to push up their costs. So that keep inflation in check. This has been one of the biggest factors in recent inflation locally.

What we might see next month (barring any dramatic changes) is that petrol prices will decrease by 189 cents per litre for 93 octane and 193 cents per litre for 95 octane. Diesel might be around 75 cents less for 0.05% and 69 cents for 0.005%, and even illuminating paraffin could be 72 cents cheaper.

What Affects Fuel Prices?

Fuel prices in South Africa are mostly decided by two things: the exchange rate between the South African rand and the U.S. dollar and what’s happening with oil prices internationally.

Right now, lower oil prices internationally are helping to bring down costs, but the rand is not doing fantastic (you will have seen it has been a bit up and down, which is still pushing prices to be a bit high.

The Rand's Recent Rollercoaster Ups and Downs

The South African rand, has been a bit all over the place in October.

It started strong, then dipped because of worries about the war between Israel and Hamas. But then it got better after that because U.S. Treasury yields (how much the U.S. government pays on its debts) went down and the Federal Reserve (the U.S. central bank) said they won’t raise interest rates much.

The rand has also been influenced by some trading that is going on as people try figure out if the Repo Rate is about to go up or not. Even how well the Boks perform can influence that a tiny bit. So, it has been a bumpy ride.

Oil's Role and Some Worries

A big reason fuel prices might get cheaper is that oil prices have been dropping.  Petrol is refined from oil. So lower oil prices equals lower petrol prices.

Oil prices recently went down from over $95 a barrel to $85 a barrel. But unfortunately, there’s a new issue brewing: Iran, who are a big oil producer, might get dragged into the Israel-Hamas conflict.

If that happens, and if more middle eastern countries join in, it could make oil prices go up significantly again. Some oil producing countries have been talking about deliberately driving the price up (which they often do anyway, truth be told) due to the conflict as a form of leverage on the international community.

For now, though, things are looking good, and there’s a chance for cheaper diesel and petrol prices locally by the end of November.