Petrol price warning for South African motorists

Investec chief economist Annabel Bishop warned that the rand’s significant weakness has cancelled out the fuel price cut that was building for April.

In fact, she said further weakness in the local currency could result in a petrol price hike.

Bishop’s comments come as the rand is currently at historic lows against the US dollar, euro and British pound.

The rand has taken a significant beating over the past week, as the currency faces a confluence of global and local pressures.

Globally, United States President Donald Trump announced reciprocal tariffs on several countries on 2 April 2025.

Trump announced a global 10% tariff on all imports and higher rates for the ‘worst offenders’, including South Africa.

South Africa was hit with 30% tariffs on local goods exported to the United States.

This announcement has severely harmed global and local markets across the world, and the rand was no exception.

Despite the wide-ranging impact of the Trump administration’s tariffs, Bishop said local pressures are the largest cause of the rand’s weakness over the past week.

“The broad sweeping US tariffs announced at the start of the month has seen marked US dollar weakness, which would have resulted in rand strength against the US dollar instead, to R17.50/USD or beyond,” she said. 

However, on the same day Trump’s tariffs were announced, the ANC’s 2025 Budget for South Africa was passed in the National Assembly following weeks-long debates and a final vote.

This final vote saw the second-largest party in the Government of National Unity (GNU), the DA, vote against the Budget, which intensified tensions between the DA and ANC.

Now, many are concerned that the market-friendly GNU will collapse, with the DA leaving and other parties being added.

“Markets remain focused on the potential breakup of the coalition between the DA and the ANC in government in South Africa,” Bishop said.

She added that this has driven the rand even weaker on Tuesday, 8 April 2025, to R19.65/USD, as markets remain deeply concerned about a GNU breakup.

Fuel price adjustments

Bishop warned that the rand would likely weaken substantially further on the DA’s exit from the GNU, pushing up fuel and other prices towards R21.00/USD or weaker.

She explained that the severity of the impact on the rand will depend on which political parties replace the DA in the GNU should it exit the coalition.

“The uncertainty has also negatively affected markets as the decision continues to pend,” she said.

“Currently rand weakness has cancelled out a fuel price cut which was building for this month, while further rand weakness will result in a petrol price hike.”

South Africa’s fuel prices are adjusted monthly, informed by international and local factors. 

International factors include the fact that South Africa imports both crude oil and finished products at a price set at the international level, including shipping costs. 

April has already seen a fuel price cut in South Africa, which saw petrol and diesel prices come down significantly on 2 April.

This was due to a declining price of oil and a stronger rand throughout March.

The changes were as follows –

• Petrol 93 – decrease of 58 cents per litre
• Petrol 95 – decrease of 72 cents per litre
• Diesel 0.05% – decrease of 84 cents per litre
• Diesel 0.005% – decrease of 84 cents per litre

These price cuts were less than what was initially expected during March, as the international oil price rose in the weeks prior amid heightened geopolitical tensions and the uncertainty that still surrounded potential US tariffs. 

However, the average Brent Crude oil price decreased from $74.89 to $71.04 in March, allowing the Department of Petroleum and Mineral Resources to cut South Africa’s fuel prices.

A stronger rand, which had been very resilient in the year to date, was another contributor to the fuel price cut.

Therefore, a lower oil price was coupled with a stronger rand, making it relatively cheaper to import oil and finished petroleum products into South Africa.

The rand appreciated, on average, against the US dollar, from R18.50 to R18.30 per USD during the period under review when compared to the previous month. 

This led to lower contributions to the Basic Fuel Prices of petrol, diesel and Illuminating Paraffin.

However, if the rand remains as low as current levels, or worse, Bishop warned this could undermine future potential cuts this month and even result in a fuel price hike for South African motorists.