August is set to bring more fuel price pain for those who operate diesel vehicles, with a significant under-recovery currently developing on that fuel, but petrol could still see a small reduction.

The latest daily snapshot from the Central Energy Fund (CEF) shows a significant under-recovery on diesel that could result in price hikes in the region of 60 cents or more if current trends persist.

However, petrol is showing an over-recovery of 20 cents for 95 Unleaded and 24 cents for 93 Unleaded.

Over- and under-recoveries form when the underlying costs of fuel, such as international oil prices and exchange rates, fluctuate. These discrepancies, compared to the current prices, are then built into the following month’s fuel price adjustments.

July saw the price of petrol rise by between 52 cents and 55 cents, while diesel went up by between 82 cents and 84 cents. This followed four consecutive months of price decreases.

If the current August predictions materialise, 95 Unleaded will cost R20.88 at the coast and R21.67 in Gauteng, where 93 ULP will cost around R21.55. The wholesale price of 50ppm diesel will rise to around R19.25 at the coast and R20.01 inland.

The current fuel price outlook is driven primarily by international product prices, with diesel currently seeing a deficit of 68 cents. A stronger rand is helping to soften the blow, however, adding seven to eight cents of relief to the equation.

International Brent Crude oil prices were hovering around $70 on July 10, slightly above the $69.36 average of the previous review period that determined July’s fuel prices.

Oil rallied earlier in July after Iran suspended its cooperation with the UN’s nuclear watchdog. This, analysts said, increased the possibility of further conflict between Iran and Israel.

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