Motorists get biggest petrol price cut since 2020

The price of both 93 and 95 unleaded petrol will be lowered by R2.04 a litre on Wednesday, the Department of Mineral Resources and Energy announced on Monday.

This will lower the price of 95 petrol in Gauteng to R23.38 a litre, from a record high of R26.74 in July. That said, petrol cost only R19.61 at the start of the year.

Bloomberg reports that this week’s cut of 8% in the 95 petrol price is the biggest monthly percentage decline since early 2020, when crude fell to record lows as demand plummeted due to worldwide lockdowns.

Diesel will be reduced by between 46.34 c a litre and 56.34c a litre.

The department says the decrease in diesel is less than that of petrol because “the middle distillate market is still tight and there is a looming fuel switch from gas to oil for heating purposes as winter season approaches in the Northern Hemisphere. This has increased demand for middle distillates”.

It expects that the demand will tighten even more which could lead to possible diesel price increases in future.

The price of illuminating paraffin will fall by 82c a litre.

The fuel prices are determined by the price of oil and the rand-dollar exchange rate.

The average Brent oil price fell from $105 a barrel in July to $94 in August. The department says this was mostly due to a global economic slowdown, and the pandemic lockdowns in China.

Meanwhile, the rand, which started August at around R16.60/$, has since crashed through R17.30 on Friday amid expectations that the US will keep interest rates higher for longer.  The rand was trading at R17.24/$ on Monday. – fin24.com