Petrol and diesel price recoveries in South Africa have taken a much more positive turn for motorists, with diesel prices in particular swinging into positive territory.
Contrasting the under-recovery in prices after the first week of trade this month, diesel prices have now joined petrol in building for a potential cut at the pumps in September.
According to the latest Data from the Central Energy Fund (CEF), petrol and diesel price recoveries have again aligned following a sizeable divergence in June and July.
With oil prices falling and the rand strengthening against the dollar, petrol prices are showing a small over-recovery of between 6 and 12 cents per litre, while diesel is showing an over-recovery of between 10 and 12 cents per litre.
Tumbling commodity prices, particularly oil, which declined by 12.1% in the first half of the year, have helped fuel the diesel revival.
Prices are down 8% this month after trade and geopolitical tensions eased, while many anticipate a supply glut later this year.
The contribution of international product prices to the recoveries for petrol and diesel diverged significantly at the end of June and during July.
This was due to global diesel shortages and pressure on supplies due to high demand from the aviation sector.
However, the latest market analysis by Bloomberg noted that diesel inventories have started to rise — but this comes with the added warning that inclement winter weather in the northern hemisphere may change this picture.
Regardless, the impact on local fuel price recoveries has been a normalisation of pricing between petrol and diesel for now.
Global product price recoveries are contributing to the over-recovery, while the relatively weaker rand is still undercutting this through an under-recovery.
While the rand strengthened against the US dollar on Tuesday, it remains weak compared to July 2025.
According to Investec chief economist Annabel Bishop, the rand has been volatile against the greenback for some time, pushed and pulled in all directions by economic realities and constantly shifting market sentiment.
A key driver of the volatility has been the Trump administration’s trade tariffs, which kicked off on 7 August. These tariffs include a 30% rate against South African exports.
The tariff chaos of the past few months has led to a weaker US dollar, ultimately benefiting the rand, but foreign policy issues between South Africa and the US have dimmed sentiment.
Bishop noted that sentiment, too, is pulling in various directions, however.
“US trade and foreign policy have proved quite changeable at times, and there is a degree of expectation that the US could roll back on tariffs if they prove to have very negative effects on the US’s growth and inflation outcomes,” she said.
However, the economist noted that it is unlikely that the Trump administration will completely backtrack.
“It remains in the US’s best interests to reach favourable trade agreements with its key trading partners to limit the negative impact on US economic growth, and particularly US consumers, ” she said.
For South Africa, Bishop noted that the headline rand exchange rate figure will continue to be swayed by the US dollar’s movements.
“Against the other key currencies, the rand has shown less movement, but is weaker overall on the euro’s climb, with less movement against the pound,” she said.
Ove the longer term, the rand’s basis will continue to be undermined by weak economic metrics, including a junk credit rating, insufficient job creation on weak GDP.
A clearer outlook for September will be apparent at the mid-month mark.
