South Africa is expected to face another fuel price hike in September as the ongoing conflict in the Middle East continues to keep global oil prices elevated, according to the data provided by the Central Energy Fund (CEF), the country's state-owned energy company.

The latest snapshot from the CEF is pointing to steep diesel price increases in the region of R2.73 for 500ppm and R2.90 for 50ppm. The petrol price predictions are less severe but significant nonetheless, with CEF data indicating under-recoveries of 66 cents for 93 Unleaded and 77 cents for 95 Unleaded. However, if current trends persist, these are likely to grow into increases of around 80 to 90 cents by the time the final sums are done at month-end. Illuminating paraffin is looking set for an increase in the region of R2.14.

This follows a volatile few months, during which the price of 95 Unleaded has increased from R19.47 in March to R24.71 in August, peaking at R27.19 in June. The wholesale price of diesel has risen from R17.70 in March to R25.30 in August, peaking at R30.30 in May.

Both grades of petrol decreased by 52 cents per litre at the beginning of August, while diesel increased by between R1.23 (50ppm) and R1.38 (500ppm).

International oil markets have seen extreme volatility since the US-Israeli war with Iran began in late February, with the critical Strait of Hormuz oil passage mostly shut to shipping traffic.

While the markets appear to have settled, with Brent crude oil trading mostly around the $90-per-barrel mark in August, down from highs of around $126 earlier in the year, prices remain well above pre-war levels of around $70.

Ole Hvalbye, commodities analyst at SEB, recently told Reuters: “A return to normal flows out of the Strait of Hormuz is now suddenly without any near-term hopes.”

However, analysts do see a gradual softening of international oil prices, with JP Morgan predicting an average of around $86 for Brent in the third quarter of this year, falling to $80 in the fourth quarter and $78 in 2027.

First published by IOL