Good news about petrol prices for South African motorists

A lower oil price spells good news for the fuel price South African motorists will pay at the pump in April 2025.

Investec chief economist Annabel Bishop explained that the Brent crude oil price has subsided this year to close to $70/bbl, averaging $75/bbl year to date. The price was $81/bbl for the same period a year ago. 

Fuel prices have not been off to a good start in 2025 so far. In January and February, South Africa’s petrol price increased by around 12 cents per litre and 82 cents per litre, respectively.

However, March saw a 7 cents per litre cut. Now, a 95 cent per litre petrol price cut is building for South Africa in April, which will also help moderate inflation.

Bishop explained that South Africa imports most of its petroleum products and relies on global oil price movements to determine the price motorists pay at the pump.

Therefore, the drop in international petroleum product prices on lower oil prices now sees lower fuel prices for April.

Part of the reason for the dampening effect on oil prices is tariff increases from the United States. This is due to concerns over global economic growth and the demand for energy and oil.

Market expectations of higher oil supply on United States policy have added to the oil price moderation.

Furthermore, the United States increased tariffs on goods produced by China and steel and aluminium products. The US is also investigating copper production in the country.

In particular, the White House noted the threat to national security from copper imports. Copper is critical to the United States’ national security, economic strength, and industrial resilience.

“Copper, scrap copper, and copper’s derivative products play a vital role in defence applications, infrastructure, and emerging technologies, including clean energy, electric vehicles, and advanced electronics,” it said.

The US “faces significant vulnerabilities in the copper supply chain, with increasing reliance on foreign sources for mined, smelted, and refined copper”.

The White House pointed out that the United States has ample copper reserves, yet the country’s smelting and refining capacity lags significantly behind global competitors.

“A single foreign producer dominates global copper smelting and refining, controlling over 50% of global smelting capacity and holding four of the top five largest refining facilities,” it said.

“This dominance, coupled with global overcapacity and a single producer’s control of world supply chains, poses a direct threat to United States national security and economic stability.” 

This is relevant to the fuel price because the United States is creating global economic uncertainty.

Increased tariffs and trade restrictions from the largest economy in the world could slow global economic growth by reducing trade and investments.

This slower growth means countries across the world will have a weakened demand for energy, including oil.

Therefore, if oil demand continues to fall, the oil price will follow, leading to lower fuel import costs and, consequently, lower fuel prices for South Africa.

However, there are some risks to this economic uncertainty, particularly when it comes to foreign exchange rates.

So far, the souring in South Africa’s political relationship with the United States has not affected the rand, which continues to run stronger towards R18.00/USD.

Bishop explained that this is largely due to the increased chance of United States interest rate cuts, which has weakened the greenback.

“South Africa’s financial market indicators are mostly all influenced to a greater or lesser degree by international market events,” she said.

For now, these market events seem to be working in South African motorists’ favour.

For example, OPEC+ is expected to increase oil production, as the US administration is projected to see a substantial ramp-up in production.

The United States has also warned against OPEC+ supporting prices at $80/bbl and above.

OPEC+ has already announced it will increase oil production starting in April, which will help moderate oil prices. 

Bishop said that, along with rand strength against the dollar, this will help keep petrol prices lower, which will have a moderating effect on inflation.