Petrol price cuts announced for March

South African motorists will experience some relief from high fuel prices in March as the Department of Petroleum and Mineral Resources has announced the official cuts to be imposed on 5 March. 

This is despite expectations in early February that prices would continue to rise as the rand came under pressure and oil prices remained buoyant. 

Since the beginning of the month, the rand has held its own versus the dollar as investors continue to be optimistic about the future of South Africa under the Government of National Unity (GNU). 

The prospect of peace in Ukraine has put downward pressure on oil prices, which have steadily declined amidst expectations of a slowing global economy. 

This has translated into the following price cuts –

• Petrol 93 – decrease of 7 cents per litre
• Petrol 95 – decrease of 7 cents per litre
• Diesel 0.05% – decrease of 17.5 cents per litre
• Diesel 0.005% – decrease of 23.5 cents per litre

The price of a barrel of Brent Crude has dropped by 3.94% over the past month, falling from $75.67 to $73.20, resulting in significantly lower import costs.

This is the largest monthly decline since September 2024, as US President Donald Trump escalated threats of tariffs against key trading partners, such as the European Union, China, Mexico, and Canada.

These threats have dampened risk appetite and cast uncertainty over energy demand. In the long run, if these tariffs are enforced, they could slow economic growth and reduce oil consumption.

Trump reaffirmed his plans to impose tariffs on imports from Canada and Mexico starting in the first week of March, including a potential 10% duty on Canadian oil.

Additionally, he threatened to double an existing tariff on Chinese imports, targeting the world’s largest crude importer. In response, Beijing vowed to implement countermeasures.

A heightened trade war between the two largest global economies would weaken economic growth and oil demand, exerting downward pressure on prices.

There have also been reports of progress toward a resolution of the war in Ukraine, which could ease supply concerns regarding Russian oil exports.

The rand has appreciated by 0.5% against the US dollar over the past month despite a series of shocks that were expected to weaken the currency.

These shocks include the postponement of the Budget Speech, rising tensions between South Africa and the US, and increasing global uncertainty.

Despite these challenges, the rand held steady in February as investors remained optimistic about South Africa’s economic trajectory.

Nedbank chief economist Nicky Weimar stated that investors are affording South Africa the benefit of the doubt, emphasising that the country must now follow through on expectations.

Before its recent weakening following Trump’s US election victory on 5 November 2024, the currency had shown unusual strength against the dollar, buoyed by optimism surrounding the GNU and reduction in load-shedding.