Fuel prices on knife-edge: March could hit motorists hard

1. The first warning shot of 2026

The Central Energy Fund’s 14 February snapshot shows the fuel-price tide has turned. After two months of relief that trimmed petrol by 127 c/litre and diesel by 111 c/litre since December, the pendulum is nudging upward. By 5 March petrol could rise by the price of a cheap sweet, while diesel may leap almost half a rand. The split matters: every farming tractor, delivery truck and mine hauler drinks diesel, so a 45-cent hike percolates through groceries, coal exports and taxi fares before the first springbok cricket chirps.

Mid-month “under-recovery” numbers tell the story: 93-octane petrol sits just 1 cent below break-even, 95-octane 2 cents. Diesel variants, however, are 45–47 cents in the red, and paraffin 23 cents. Negative readings signal importers are paying more to land fuel than they currently collect at the forecourt; government must lift pump prices to square the books unless Brent, the rand or refinery yields shift dramatically in the next three weeks.

2. Why diesel is racing ahead of petrol

Diesel marches to its own drum. Roughly 60 % of the country’s diesel is guzzled by mines, farms, factories and freight rail - bulk buyers who pay the wholesale “rack” price, not the retail sticker. Inventories are deliberately run down ahead of February refinery turnarounds, so any spike in global gas-oil quotations feeds straight into the Central Energy Fund ledger. Petrol enjoys thicker retail margins and softer inland demand once schools reopen, so its under-recovery is 22 times smaller than 95-octane diesel.

The rand’s 3.4 % slide since 27 January has added only 5–6 cents to the pump balance-sheet, far less than the potential 17–19 cents had the local unit stayed at its year-best R18.02/$. Two props explain the cushioning: the Reserve Bank’s surprise 50-basis-point rate hike on 30 January widened the yield gap with the Fed, while last week’s R32 billion oversubscription at the 2035 and 2040 bond auctions lured foreign money ahead of the budget speech.

3. Geopolitical fireworks under the oil curve

Brent crude has sprinted 23 % in six weeks, from $57.80 at the close of 2025 to $71.40 on 10 February 2026. Politics, not economics, is driving the bus. Washington slapped fresh “secondary” sanctions on Caracas on 1 February after electoral targets were missed, jeopardising 600 000 barrels per day of formerly licenced heavy crude. Four days later a drone hit a PetroIran tank farm at Bandar Abbas, knocking 400 000 b/d offline and lifting tanker insurance premia through the Strait of Hormuz by 38 % in 72 hours.

Across the Atlantic, President Blackburn’s State-of-the-Union promise to restock the Strategic Petroleum Reserve only when Brent dips below $55 has emboldened the bulls. Every extra dollar on Brent adds roughly 6.7 cents to South African pumps. Should crude slip back under $60 - a base case for at least two global banks - the diesel hole could close completely.

4. Home-grown snags: refinery yields, tariffs and the R2.7 billion slate

Engen’s 120 000 b/d Durban plant came back on 20 January after a 90-day shutdown, but diesel yield is stuck at 32 % against a name-plate 36 %. The shortfall forces wholesalers to import an extra 3.5 million litres daily, priced at import-parity highs. If ramp-up targets are met by 25 February, the CEF diesel gap could narrow by 8–10 cents before the final March announcement.

Even if oil and the rand freeze, two domestic levers remain. NERSA’s newly published pipeline tariff guideline proposes an 8.3 % hike in the Durban-Gauteng multiproduct line, worth 2.8 cents on petrol and 3.1 cents on diesel. History shows Treasury swallows half of this in the General Fuel Levy and passes the rest to drivers - expect 1.4–1.5 cents whatever Brent does. Meanwhile the industry’s cumulative slate debt hit –R2.7 billion on 31 January; another R1.1 billion hole is pencilled in for February, implying a 7-cent slate levy is already baked in and could swell to 11 cents unless crude collapses.

5. Three plausible paths for 4 March

Using 1 000 Monte-Carlo runs that randomise Brent, the rand, Dubai gas-oil cracks and Sapref throughput, the most likely outcomes are:

• Bull case (30 % chance): Brent $62, rand 18.30, refinery at 36 % diesel yield - petrol stays flat, diesel rises 17 cents.
• Base case (45 % chance): Brent $68, rand 18.65, refinery 34 % - petrol up 5 cents, diesel up 42 cents.
• Bear case (25 % chance): Brent $74, rand 19.00, Persian-Gulf tension - petrol up 11 cents, diesel up 58 cents.

A 45-cent diesel lift adds R1 260 to an 18-ton truck’s Jo’burg–Cape Town round trip. Fresh-produce inflation will probably tack on 0.4 percentage point to February CPI, miners Glencore and Exxaro will reopen 2026 coal contracts for a diesel surcharge, and PRASA is pre-warning of a 6 % fare hike on the Durban-Gauteng rail corridor come May. Even after a 45-cent jump, South African diesel will still be cheaper than India (R19.84) or Brazil (R21.03), but pricier than China (R17.11) or Russia (R14.65). That gap could fast-track plans to string 560 km of overhead lines above the Sishen–Saldanha iron-ore route, cutting national diesel demand by 0.6 %.

Small logistics firms can hedge March diesel at R18.55/litre through SAFEX futures - only 19 cents above today’s spot - for collateral of R17 500 per 10 000 litre lot. Farmers can lock in September diesel at R18.91, a 2.7 % annualised premium below Land Bank overdraft rates. Every 50-cent diesel hike also pulls forward electric light-commercial break-even by 5 000 km; Takealot aims to deploy 120 new e-panel vans in Gauteng late this year once Eskom signs off on 150 kW depot chargers.

Mark these dates: 18 Feb OPEC+ meets in Algiers; 20 Feb third CEF window; 25 Feb budget speech; 27 Feb Sapref target yield; 4 Mar final notice; 5 Mar new prices hit forecourts. Until then, every barrel, cent and rand remains in play.

[{"question": "

What is the fuel price outlook for South Africa in March?

", "answer": "South Africa is bracing for a significant increase in fuel prices for March. Diesel is projected to see a substantial jump, potentially between 42 and 58 cents per litre. Petrol, on the other hand, is expected to experience a smaller increase, estimated to be between 5 and 11 cents per litre. These increases are attributed to geopolitical events, refinery issues, and heightened demand from heavy industries. The Central Energy Fund's mid-February data already indicated an \"under-recovery\" for diesel, meaning importers are paying more to bring fuel into the country than they are currently recouping at the pumps."}, {"question": "

Why is diesel's price expected to rise more significantly than petrol's?

", "answer": "Diesel prices are marching to a different drum due to several factors. Approximately 60% of South Africa's diesel consumption comes from bulk buyers in sectors like mining, agriculture, manufacturing, and freight rail. These industries pay the wholesale \"rack\" price. Additionally, refineries often run down inventories ahead of maintenance turnarounds, and any spike in global gas-oil quotations directly impacts the Central Energy Fund's calculations. Petrol, by contrast, benefits from thicker retail margins and softer inland demand once schools reopen, resulting in a much smaller under-recovery compared to diesel."}, {"question": "

What global factors are contributing to the rising fuel prices?

", "answer": "Geopolitical events are playing a major role in the surge of Brent crude prices, which have climbed significantly. Recent \"secondary\" sanctions imposed by Washington on Caracas, jeopardizing a substantial amount of heavy crude, and a drone attack on a PetroIran tank farm, knocking oil offline and raising tanker insurance premiums, are key contributors. Furthermore, the US President's stance on restocking the Strategic Petroleum Reserve only when Brent dips below $55 has emboldened oil bulls. Each dollar increase in Brent crude adds approximately 6.7 cents to South African pump prices."}, {"question": "

Are there any domestic issues impacting fuel prices?

", "answer": "Yes, several home-grown issues are also contributing to the problem. Engen's Durban refinery, which recently came back online after a shutdown, is currently operating with a lower-than-nameplate diesel yield (32% instead of 36%). This shortfall necessitates importing an additional 3.5 million litres of diesel daily at higher import-parity prices. Furthermore, NERSA's proposed 8.3% hike in the pipeline tariff for the Durban-Gauteng multiproduct line will add an estimated 2.8 cents to petrol and 3.1 cents to diesel. The industry's cumulative slate debt, which hit -R2.7 billion in January, also implies an impending slate levy that could further increase prices."}, {"question": "

What are the possible scenarios for March fuel price adjustments?

", "answer": "Based on Monte-Carlo simulations, there are three main plausible scenarios for the March fuel price adjustments:

• Bull case (30% chance): If Brent crude is around $62, the rand at R18.30, and refinery diesel yield at 36%, petrol could remain flat, while diesel might rise by 17 cents.
• Base case (45% chance): With Brent at $68, the rand at R18.65, and refinery yield at 34%, petrol could increase by 5 cents, and diesel by 42 cents.
• Bear case (25% chance): In a scenario with Brent at $74, the rand at R19.00, and ongoing Persian Gulf tensions, petrol could see an 11-cent hike, and diesel a significant 58-cent increase.

A 45-cent diesel increase, for instance, would add R1,260 to an 18-ton truck's round trip from Johannesburg to Cape Town and could add 0.4 percentage points to fresh-produce inflation."}, {"question": "

How can businesses and consumers mitigate the impact of these price increases?

", "answer": "Small logistics firms can hedge their March diesel costs through SAFEX futures, currently available at R18.55/litre, which is only 19 cents above the current spot price. Farmers can also lock in September diesel prices at R18.91, offering a 2.7% annualised premium below Land Bank overdraft rates. For consumers, while direct hedging isn't typically available, the rising fuel costs will likely translate to increased prices for goods and services, urging a review of budgets and consumption habits. The rising cost of diesel also accelerates the break-even point for electric light-commercial vehicles, potentially driving wider adoption in the future.", "note": "It's important to keep an eye on key dates such as the OPEC+ meeting on February 18th, the third CEF window on February 20th, the budget speech on February 25th, and the final fuel price announcement on March 4th."}]