Festive Season Fuel Hike: Petrol, Diesel, and Paraffin Prices Surge Amid Global and Local Factors

Consumers Brace for Higher Fuel Costs as DMPR Announces Significant Price Increases Across All Categories.

The festive season has brought unwelcome news for South African consumers as the Department of Mineral and Petroleum Resources (DMPR) announced a significant increase in fuel prices, effective immediately.

Petrol Price Surge

The price of all grades of petrol has risen by 17 cents per litre, impacting both 93 (ULP & LRP) and 95 (ULP & LRP) categories.

In Gauteng, a litre of 95 petrol now costs R21.47, up from R21.30 in November.

At the coast, the price has increased to R20.68, up from R20.51.

Diesel and Paraffin Price Increases

Diesel (0.05% sulphur): Increased by 54.88 cents per litre.

Diesel (0.005% sulphur): Increased by 55.88 cents per litre.

Illuminating Paraffin (wholesale): Increased by 48.88 cents per litre, while the Single Maximum National Retail Price (SMNRP) rose by 66 cents per litre.

The maximum LPGas retail price surged by R1.72 per kilogram.

Factors Driving the Price Hike

The DMPR attributed the increases to multiple global and domestic factors:

Crude Oil Dynamics: The average Brent Crude oil price decreased marginally from 73.28 USD to 72.70 USD. However, the OPEC+ decision to maintain production levels in December and increased output from non-OPEC nations failed to offset stagnant global economic growth.

Seasonal Demand:

Diesel and illuminating paraffin prices surged due to higher seasonal demand in the Northern Hemisphere's winter.

LPG prices rose due to increased propane and butane costs.

Currency Depreciation: The Rand weakened against the US Dollar, averaging 17.93 ZAR/USD, compared to 17.53 ZAR/USD in the previous period. This added 22.35 cents per litre to petrol prices and around 23 cents per litre to diesel and paraffin prices.

Inventory Adjustments: The average international product prices of petrol were influenced by lower global demand, the shift to cheaper winter-grade gasoline, and higher inventories, providing a slight buffer against larger increases.

Economic and Consumer Implications

With the festive season in full swing, these price hikes will significantly affect household budgets, particularly in transportation and heating costs. Businesses reliant on diesel and paraffin, such as logistics and manufacturing, are expected to feel the pinch, potentially driving inflationary pressures across various sectors.

Government Response and Outlook

While announcing the changes, the DMPR highlighted the need to monitor global oil market trends and currency fluctuations closely. The department reassured consumers that efforts are underway to stabilize fuel prices in the longer term. However, the immediate focus remains on navigating global supply dynamics and mitigating local currency vulnerabilities.

The festive season fuel price hikes have added financial strain on South African consumers and businesses. With global energy markets in flux and local economic pressures mounting, stakeholders must prepare for continued volatility in fuel costs heading into 2025.