Petrol price hikes announced for November

The price of petrol and diesel will rise from 6 November, with the Department of Mineral and Petroleum Resources (DMPR) publishing the official prices for next month. 

Geopolitical tension in the Middle East has driven the price of oil higher, while instability has resulted in investors flocking to the relative safehaven of the dollar. 

While the price of oil declined towards the end of October, the average price remained elevated. As the DMPR uses the average price in its calculations this translated in higher prices at the pump. 

The official changes to the price of fuel are shown below. 

• Petrol 93 – increase of 25 cents per litre
• Petrol 95 – increase of 25 cents per litre 
• Diesel 0.05% – increase of 21 cents per litre
• Diesel 0.005% – increase of 20 cents per litre

At the start of October, fuel prices were cut to the lowest levels since February 2022, when Russia’s invasion of Ukraine caused supply chain disruptions and restricted imports of Russian crude oil, which pushed oil prices to multi-year highs.

However, November has brought the five consecutive months of petrol price cuts to an end. 

The positive outlook is that these recent increases are likely a temporary spike amid an overall downward trend.

Oil demand from the two largest consumers, the US and China, is projected to remain muted in the months ahead.

China’s economy, in particular, is facing significant challenges, with recent stimulus measures likely falling short of achieving the year’s GDP growth target of 5%.

As the world’s largest fuel importer, China’s economic slowdown is expected to exert considerable downward pressure on oil prices.

This anticipated drop in demand is set to align with rising supply as the Organisation of Petroleum Exporting Countries (OPEC) rolls back supply constraints.

OPEC member nations are concerned that ongoing production cuts may lead to a loss of market share to US producers, which could destabilize the market.

Additionally, many of these countries rely heavily on oil export revenue to fund their budgets, and further supply reductions may strain their financial stability.

Notably, Saudi Arabia has indicated its support for lifting supply caps in December. OPEC is scheduled to meet in early December to discuss its production strategy for 2025.

If OPEC fully removes production cuts, more than one million barrels per day could return to the market. With demand expected to stay weak, this would drive prices down.

In the near term, Israel’s recent strike on Iran was limited in scope and did not target oil facilities.

As a result, oil prices dropped by 6.6% in the past week, which could lead to lower petrol and diesel prices by the December announcement.

Major US investment banks have lowered their Brent Crude price forecasts, citing minimal supply risks.

One potential risk remains the strong dollar, buoyed by elevated geopolitical tensions and the upcoming US election on November 5.

During global uncertainties, investors often turn to the dollar and US-based assets as a ‘safe haven.’

This trend tends to weigh on emerging market assets and currencies, like the rand, as investors prioritize security over higher returns.

However, since the establishment of the Government of National Unity (GNU), the rand and South African assets have shown greater resilience than in previous years.

The rand has also benefited from an aggressive start to the US Federal Reserve’s rate-cutting cycle, enhancing the appeal of local assets.