As we head into another week of geopolitical uncertainty bracing for more pain, I have to ask: should this be the case?
I read an article recently on past refined and crude oil prices that made me realise that, although the crude price has been much higher than it is currently, we have never seen such high fuel prices.
Let’s unpack this alongside the current situation to see how the fuel price is set and check on the short-term outlook.
Oil prices have held steady at around $105 per barrel since early March, so why do pump prices keep climbing?
The answer lies not in crude oil alone, but in the multiple layers of costs and policy decisions that determine what you pay per litre.
First, the temporary fuel levy relief is being scaled back. In April and May 2026, the government reduced the General Fuel Levy by R3 per litre to cushion consumers from recent oil price spikes.
However, this relief will be cut in half starting in June.
This single policy change automatically adds R1.50 to every litre of petrol, regardless of global price shifts.
This tax adjustment is the dominant reason motorists are seeing higher prices despite stable crude costs.
Second, $105pb is not low compared to historical averages. The recent surge from $93 to over $101pb is due to the US-Iran war.
Even though prices have stabilised at this level, the new baseline cost is high and, as SA imports most of its refined fuel, it is highly sensitive to international price movements.
Third, the exchange rate plays a crucial role. Fuel is priced globally in US dollars, so a weaker rand directly hits local pockets — yours and mine.
In early 2026, the rand hovered around R16.49/$ — weak compared to historical norms. Every cent the rand loses against the dollar translates into higher pump prices.
Other factors include rising refining and distribution costs, dwindling local refining capacity forcing more expensive imports, and the fact that taxes make up roughly 60% of the final pump price.
Retailers are tied to these pricing cycles by logistics, and wholesale cost changes take about two weeks to reach consumers.
In short, petrol prices are rising because of a combination of local policy decisions (levy relief cut), global shifts like elevated oil prices, a weak rand, and structural costs.
Even if oil stays stable, the R1.50/l tax increase in June alone will push prices higher for all SA motorists.
Inflationary pressures are starting to reach consumers and this will more than likely lead to increases in lending rates which will create an even more financially strained climate for consumers.
With this in mind, best to keep debts low and stay focused on your expenses for the next few months until the storm is over.
Finance Brokers owner Scott Roebert has been a financial planner for 25 years, specialising in bespoke investments and retirement planning. You can find him on Facebook