South Africans have barely absorbed September’s fuel-price increase, but a fresh surge in global oil prices is raising the prospect of another hit at the pump.
Brent crude climbed towards $98 a barrel on Monday, after rising about 8% last week, as escalating US-Iran attacks on commercial vessels raised fears of a deeper disruption to oil supplies.
The biggest concern is the Strait of Hormuz, where tanker traffic has fallen to its lowest level since May.
The waterway is a critical route for global energy supplies and further disruption could trigger a significant supply shock. Goldman Sachs has warned that oil could reach $120 a barrel if attacks continue.
For South African motorists, the timing is particularly painful.
September’s fuel shock has already landed
From September 2, petrol prices increased by R1.34 a litre, while diesel rose by between R2.94 and R3.15 a litre.
The September increase was driven largely by higher international oil and petroleum-product prices, with the stronger rand providing only limited relief.
Inland, 95 unleaded petrol now costs R26.92 a litre, while wholesale 50ppm diesel has moved above R30 a litre.
Now oil is moving sharply higher again.
South Africa's monthly fuel-price calculations are heavily influenced by international petroleum prices and the rand-dollar exchange rate. If crude remains elevated, that pressure can feed into the next pricing cycle.
It does not guarantee another increase. A stronger rand or a reversal in oil prices could soften the impact.
But the latest move in crude has put the risk firmly back on the table.
The warning from South Africa’s debt experts
When September’s increase was announced, Debt Rescue CEO Neil Roets warned that the impact would extend far beyond motorists.
“Diesel is the lifeblood of our logistics and agricultural sectors,” Roets said, warning that a sharp increase could feed through into the cost of essential goods, staple foods and public transport.
He described the September increase as part of a “compounding cost of living crisis”, saying households already under pressure would struggle to absorb further increases.
That warning takes on fresh significance as oil approaches $100 and disruption around Hormuz intensifies.
Diesel could spread the pain
The biggest concern for the wider economy is not only the cost of filling a car.
Diesel is used extensively in freight, agriculture, mining, construction and logistics.
If fuel costs rise, the impact can spread through the economy as businesses pay more to move goods, operate machinery and transport raw materials.
Those higher costs can ultimately reach consumers through food, transport and other everyday goods.
The latest global oil surge is already feeding concerns about inflation, with diesel prices hitting record levels internationally.
Hormuz is now the critical question
The oil market is watching the Strait of Hormuz closely.
US and Iranian forces have exchanged attacks on vessels, while Iran is preparing to announce a restricted shipping zone and a proposed new corridor through the Strait.
At the same time, tanker traffic has dropped sharply.
That matters because an oil-price spike caused by fear is one thing. A sustained disruption that prevents crude from reaching international markets is another.
The longer the disruption lasts, the greater the risk of a prolonged oil shock.
South Africans are watching the next fuel-price cycle
The September increase has already pushed household and business costs higher.
The question now is whether the latest surge in crude lasts long enough to affect the next round of South African fuel prices.
Brent does not need to remain above $100 for another increase to happen, and the final outcome will depend on several factors, including the rand and international petroleum-product prices.
But with oil already close to $100 and shipping through Hormuz under growing pressure, South Africa is once again exposed to a global energy shock.
For motorists, the concern is simple: September’s fuel increase may not be the end of the pain.
Oil shock could add to inflation pressure
The impact of higher oil prices could extend beyond the petrol station.
Fuel costs feed directly into inflation and indirectly into the price of transporting goods and running businesses. The South African Reserve Bank has previously noted that higher fuel costs were a major driver of inflation, while renewed increases in global oil prices pose an additional risk.
That means a prolonged oil shock could complicate the outlook for inflation and interest rates, particularly if higher fuel and transport costs begin feeding through into other prices.
Currently set at 7.75%, the repo rate has remained a tool for the Sarb in addressing inflation and economic growth. The prime lending rate in the country is 10.50%. The next decision by Sarb will be announced towards the end of September. - additional reporting The National Team