Petrol looks set for another price cut, but diesel may be hiked

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Almost mid-way through the month, the latest data from the Central Energy Fund show that petrol prices may be cut in the first week of October.

However, diesel is on track for a price hike.

Based on the latest data, the price of 95 unleaded petrol is expected to fall by around R1.45 a litre. At current levels, the 95 petrol price in Johannesburg could move below R22 a litre in October - for the first time since May this year.

The price of 93 petrol could drop by around R1.36 a litre. However, diesel price is currently on track for a hike of between 66c to 74c a litre.

The fuel prices are usually adjusted on the first Wednesday of a month and determined by the price of oil and the rand-dollar exchange rate. 

While the rand has seen some volatility this month, the oil price has slumped to its lowest level since January amid concern about energy demand as steep interest rate hikes weigh on global economic growth.

On Wednesday, Brent crude oil was trading below $93 a barrel - after hitting a high of $123 a barrel following Russia’s invasion of Ukraine in February.

But diesel prices are remaining stickier than petrol because of a squeeze on diesel supplies worldwide.

READ | Oil and trouble: Why diesel prices aren't coming down that much

This is due in part because Europe - which produces more petrol than it needs - is an importer of diesel, much of it from Russia.

The invasion of Ukraine and subsequent sanctions stopped the flows. This has squeezed prices higher as European countries scramble to find alternative diesel sources.

In South Africa, continuing problems with the railways have increased truck deliveries - fuelling the local demand for diesel. 

According to 2019 data from the Department of Energy, South Africa consumed 12.9 billion litres of diesel and 10.77 billion litres of petrol.

With more than two weeks to go before the end of the month, the October fuel prices could still see big changes depending on oil price and exchange rate volatility. 

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