Steep September fuel price hikes loom as Middle East conflict keeps oil elevated

South African motorists are facing steep fuel price increases from September, driven largely by international oil prices that remain elevated because of the ongoing conflict in the Middle East.

The latest daily snapshot from the Central Energy Fund points to petrol price increases in the region of 90 cents a litre for 93 Unleaded and R1.01 for 95 Unleaded. With the most recent daily data showing the under-recovery deepening further, that shortfall could still widen by month-end.

Diesel prices are heading back toward crisis territory, with Central Energy Fund data indicating potential hikes of around R2.88 for 500ppm and R3.09 for 50ppm. Illuminating paraffin is also set for an increase, in the region of R2.23.

It has been a highly volatile year for fuel prices in South Africa. The price of 95 Unleaded rose from R19.47 in March to R24.71 in August, having peaked at R27.19 in June. The wholesale price of diesel climbed from R17.70 in March to R25.30 in August, after peaking at R30.30 in May.

Both grades of petrol fell by 52 cents a litre at the start of August, while diesel rose by between R1.23 (50ppm) and R1.38 (500ppm) over the same period.

Middle East war

Global oil markets have seen significant volatility since the US-Israeli war with Iran began in late February, with the critical Strait of Hormuz shipping route largely closed to traffic as a result.

While markets have shown signs of settling, with Brent crude trading mostly around $90 a barrel in August – down from highs of around $126 earlier in the year – prices remain well above pre-war levels of roughly $70.

Commodities analyst Ole Hvalbye of SEB told Reuters that hopes of a near-term return to normal flows through the Strait of Hormuz have effectively evaporated.

On the upside, analysts do anticipate a gradual softening in international oil prices. JP Morgan is forecasting Brent to average around $86 a barrel in the third quarter of this year, easing to $80 in the fourth quarter and $78 in 2027.