Bad news about the price of petrol and diesel in South Africa

The war in Iran is seemingly nearing its end, with many South African consumers hoping this will also bring an end to high petrol and diesel prices.

However, with peace negotiations still fragile, the Strait of Hormuz not yet in the clear, and oil producers taking time to return to full operation, it may still be some time before fuel prices return to pre-war levels.

This is according to the Bureau for Economic Research’s Lisette Ijssel de Schepper, who explained what needs to happen for fuel prices to recover.

Since the start of the Iran war, global oil prices have been sky-high on the back of heightened uncertainty and the effective closure of the Strait of Hormuz.

These higher oil prices have, in turn, pushed up refined fuel prices. As a net fuel importer, South Africa has seen a substantial increase in fuel prices over the past four months.

On 17 June, Iran and the United States signed a memorandum containing 14 broad commitments aimed at reducing hostilities and creating space for further negotiations.

While some points of contention remain unresolved, Ijssel de Schepper said both Washington and Tehran now appear to have stronger incentives to avoid renewed escalation than to pursue it.

In the meantime, investors have already started to price in the economic benefits of peace, with Brent crude oil prices having fallen sharply in the week of 15 June.

After news of the memorandum signing broke, oil prices dropped by more than 4% toward $83 per barrel, the lowest in more than three months.

By Friday, 19 June, Brent crude oil was trading at around $77 per barrel, its lowest level since March this year.

Ijssel de Schepper said this means petrol and diesel prices are on track to decline at the start of July.

While the withdrawal of the National Treasury’s General Fuel Levy (GFL) relief in July may offset these declines, it is still a move in the right direction.

However, South Africa will need to see more than just lower global oil prices before petrol and diesel prices at the pump can return to pre-war levels.

Time will tell

Ijssel de Schepper explained that, while the United States has now officially ended its blockade in the Strait of Hormuz, there are still some practical constraints to address before things can return to “normal”.

Notably, she said it remains unclear whether parts of the Strait are mined, which could slow the reopening. 

“As we have argued before, the challenge is not only getting ships out, but convincing them to come back in,” she explained. 

Crucially, insurers will need to feel comfortable providing coverage for vessels wanting to pass through the Strait, which may take some time.

Ijssel de Schepper said some Gulf producers are preparing to increase their output again, although this will also take time. Similarly, refineries will need time to return to full operation. 

“Even if all goes smoothly, likely strong global demand to rebuild emergency inventories suggests prices are unlikely to return quickly to pre-war levels,” she said. 

The International Energy Agency recently said it expects the oil market to return to oversupply only next year as producers seek to make up for this year’s losses.

In the meantime, South Africans are set to still feel some pain at the pumps, with a return to pre-war prices still some time away.

The Central Energy Fund currently projects the following overrecoveries for fuel prices:

• Petrol 95 – R2.80 per litre
• Petrol 93 – R2.85 per litre
• Diesel 0.05% – R4.46 per litre
• Diesel 0.005% – R4.83 per litre

In April 2026, the Treasury introduced some fuel price relief by cutting the GFL. However, this relief is now set to end.

June already saw R1.50 added, and July is set to see the GFL return in full, to R4.10 per litre for petrol and R3.93 per litre for diesel.

Based on current forecasts, this will partially offset the decline expected in diesel prices, and fully offset the decrease pencilled in for petrol prices.