Fuel price high, Gas or Gasoline increased or rising cost concept.
South Africans need to brace for a major shock as April fuel prices could jump by as much as R2 to R4 a litre, following the spike in global oil and diesel prices and the fall in the rand.
Stanlib chief economist Kevin Lings warned on Tuesday that “the daily under-recovery on SA’s petrol has jumped to 185c/l, while the daily under-recovery on the diesel price is now a massive 354c/l.” If things get worse, the hikes could be even higher.
This excludes the increases in the fuel levy, Road Accident Fund levy, and carbon taxes announced in last week’s 2026 Budget, which are set to come into effect on 1 April. (Government may decide to cancel these increases, or come up with emergency relief measures in the wake of the crisis, as it did during the Covid pandemic fallout in 2020).
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Oil prices surge
It comes in the wake of the US-Israeli airstrikes on Iran and the ensuing Middle East crisis that has hit oil and energy supplies. This has seen Brent crude prices surge and the rand materially weaken since the weekend.
“Unfortunately, the recent US and Israel attack on Iran, as well as Iran’s subsequent attack on numerous countries in the Middle East, have pushed the oil price significantly higher,” Lings says in a Stanlib (part of the Standard Bank Group) note.
“Year-to-date, the Brent oil price is up 30.9% and has risen by 12% over the past year. In comparison, the SA annual rate of fuel inflation was measured at -10.9% year-on-year in February 2025.
“At the same time, the rand has weakened measurably against the dollar [mainly because of dollar strength],” he explains.
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Petrol and diesel prices to get worse
Lings warns that the daily under-recovery in SA’s petrol and diesel prices could get worse if the oil price spirals further and the rand sees a sharper decline. This will fuel SA’s inflation and take initially forecast SA Reserve Bank rate cuts this year off the table.
“These estimates [185c/l under-recovery in SA’s petrol price and 354c/l under-recovery in diesel price] do not consider the further increase in the oil price today [later Tuesday] or the latest bout of rand weakness, which suggests that the fuel price under-recovery could increase further in the short-term,” he says.
“If the daily under-recovery on the petrol and diesel price remains unchanged at 185c/l and 354c/l respectively, then in April SA CPI will rise by a further 0.5 percentage points more than the current estimate for the monthly increase, taking the annual rate of inflation up from a forecast 3.3% to 3.8%,” he warns.
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Interest rate cuts
“[This] would reduce the scope for SA interest rate cuts in the short- to medium-term depending on the duration of the Iran conflict,” says Lings.
“We are still working on the assumption that if the Iran conflict is resolved within the next week or two then the oil price should adjust lower.”
“We will monitor the under-recovery estimate each day as the Iran conflict unfolds and the oil price and rand exchange rate adjust,” he adds.
Lings notes that the Department of Mineral and Petroleum Resources’ increase in fuel prices for this month, which became effective today (4 March), mainly reflects the rise in the international oil price during February (+4.8% month on month).
“This follows a decline in the petrol price of 65c/l at the beginning of February and a drop of 65c/l at the beginning of January. Importantly, the February decline in the fuel price is not yet reflected in SA inflation data,” he says.
This article was republished from Moneyweb. Read the original here.
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