Perfect storm for fuel prices in South Africa

Surging oil prices are weighing heavily on South Africa’s fuel price outlook for August 2026 due to a combination of conflicts in both the US-Iran and Russia-Ukraine wars.

The Central Energy Fund’s (CEF’s) fuel price review period for next month’s prices started on 26 June 2026.

At that point, its unaudited fuel price review data showed substantial over-recoveries in the prices of all types of fuel.

In the case of an over-recovery, the price of the relevant fuel is lowered to ensure retailers, wholesalers, and suppliers are maintaining regulated margins.

The primary reason for the decline was the reopening of the Strait of Hormuz between Iran and Oman due to a ceasefire and a memorandum of understanding between the US and Iran.

That development allowed petroleum product producers to get their ships out of the Persian Gulf and head to export destinations.

With analysts anticipating supply to increase in the global market, the price of oil retreated back near levels last seen before the conflict started in late February 2026.

The price of a barrel of Brent Crude oil, often used as a benchmark in the market, dropped from roughly $97 on 3 June to around $70 by the end of the month.

The price remained relatively stable until 7 July 2026, when US President Donald Trump declared the ceasefire and memorandum of understanding over, allegedly due to attacks on two oil tankers.

In the days that followed, the conflict and the price of oil escalated. For the first time since May 2026, the price of a barrel of Brent Crude reached $100 on Thursday, 23 July 2026.

The most recent surge was driven by Iran-backed Houthi militants carrying out attacks on two Saudi oil tankers in the Red Sea, intended to enforce a blockade of Saudi ports.

The sea provides an alternative export route for oil from Saudi Arabia, either through the Gulf of Aden or the Suez Canal.

Russia-Ukraine war also playing a part

The attacks led to Asian buyers considering using the Suez Canal to avoid ships passing through close to Yemen, from where the Houthis are operating.

The news is especially bad for South Africa, as Saudi Arabia is a major source of our refined petroleum products.

On top of the events in the Red Sea, several vessels were attacked in the Strait of Hormuz, while the US launched fresh strikes on Iran.

Leaders from Washington and Tehran have maintained that near-term peace talks are not on the table, setting expectations that petroleum supply will remain constrained.

A conflict several thousand kilometres away has compounded the situation. Kazakhstan halted crude exports through the Caspian Pipeline Consortium terminal after drone attacks earlier in the week.

Russia blamed the strikes on Ukraine, against which it has been waging a war since 2022. The perfect storm of factors makes for a bleak forecast for fuel prices next month.

The expected decrease in the retail price of a litre of unleaded 95 has dropped from R3.67 on 26 June to R0.54 by 22 July. Unleaded 93 petrol’s anticipated drop has slumped from R3.70 to R0.59.

Wholesale diesel price expectations have taken an even worse hit. At the start of the review period, 50ppm diesel showed an over-recovery of R5.82 per litre.

That has swung to an under-recovery of R0.66. The number has risen sharply in recent days and could exceed R1 if the prevailing market conditions continue.

The table below shows the expected changes in fuel prices for August 2026, based on the CEF’s unaudited data as of 22 July 2026.

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