Markets remain bullish, while fuel prices are under pressure

THE sudden attack of the US on Iran nuclear facilities last week and the almost day-to-day attacks on each other between Israel and Iran, has let to a sudden strong increase in oil prices.

- CHRIS HARMSE

Since the beginning of the Israel-Iran war on June 13, 2025, the brent oil price increased from $70 (R1 251) per barrel to $77 per barrel on June 20.

During the same time, the exchange rate of the Rand depreciated by 30 cents from R17.77 against the dollar to R18.07/$. Although both the oil price as the value of the Rand recovered till Friday to R17.78/$ and $66.47/$, the under recovery in South Africa's fuel prices could not be avoided.

Last Wednesday the price for 95 Petrol was still 52c per liter under-recovered and that for diesel 83c per liter. Although both factors improved strongly last Thursday and Friday it will be a question of being too little too late, and consumers are likely to face a steep increase in fuel prices this coming week.

One must just keep perspective on these values. The public may immediately think that South African inflation rate is bound to increase rapidly and that it may force the Monetary Policy Committee (MPC) of the Reserve Bank to turn around and increase interest rates soon.

However, the inflation rate is calculated by comparing the annual increase. If the petrol price does increase by 50c per liter on Wednesday, the motorist will then pay R21.85 per liter more in Gauteng.