South Africa’s Diesel Outlook Improves as Fuel Levy Pressures Petrol Prices

Fresh data from the Central Energy Fund (CEF) points to the first material over-recovery in months, driven by a firmer rand and steadier oil, but the staged withdrawal of temporary fuel levy relief will absorb much of the gain for petrol users.

Diesel in strong over-recovery, petrol constrained by tax

CEF’s latest daily snapshots show Petrol 93 in an over-recovery of 26 cents per litre and Petrol 95 at 21 cents per litre for June. Diesel is far stronger: 0.05% sulphur wholesale shows an over-recovery of R5.29 per litre, while 0.005% sulphur is at R4.60 per litre. Illuminating paraffin is also in deep over-recovery, at about R5.60 per litre.

These indicators mark a sharp turn from early May, when petrol still showed an under-recovery of around 85 cents per litre on CEF’s models. The improvement reflects Brent crude stabilising below recent peaks and the rand trading mostly under R17 to the US dollar in recent weeks. At the time of the latest projections, Brent was quoted near US$96.20 a barrel and the rand around R16.33/US$.

However, National Treasury‘s tax stance now dominates the petrol outlook. The government is phasing out the temporary fuel levy relief it introduced in April to cushion previous price shocks. From June, it will add back R1.50 per litre to the petrol levy, reversing half of the R3.00 per litre relief. For diesel, R1.97 per litre of the previously granted R3.93 per litre rebate will return.

As a result, economists expect petrol prices to still rise by more than R1.20 per litre in June, even though the underlying market shows an over-recovery. The remaining levy relief is scheduled to fall away fully in July, unless Treasury announces fresh measures.

Relief for logistics, agriculture and inflation expectations

Diesel users are positioned very differently. The current over-recovery is large enough to absorb the partial levy return and still deliver lower pump prices. CEF projections shared with domestic media indicate wholesale diesel could fall by between R2.60 and R3.30 per litre in June after the levy adjustment. In cent terms, indicative decreases are around 460 to 529 cents per litre, depending on grade.

If market conditions hold, indicative modelling points to June decreases of 26 cents per litre for Petrol 93 and 21 cents for Petrol 95, and larger cuts for diesel and illuminating paraffin. However, those pump outcomes will ultimately reflect how levy changes and any late-month moves in oil and the rand net out.

The base from which these changes apply remains high. In May, inland petrol prices stood at R26.52 per litre for 93 and R26.63 for 95, while inland diesel 0.05% traded at R32.09 and 0.005% at R32.30. Coastal prices were slightly lower, but still elevated by historic standards.

For investors, the diesel over-recovery is the key macro signal. Lower diesel prices would directly support road freight, mining, agriculture and industrial users, easing operating costs and helping moderate near-term inflation expectations. Transport-reliant listed logistics groups and food-value-chain companies stand to gain if projected reductions materialise and persist.

However, CEF and economists still flag a fragile balance. The fuel price formula remains driven by two variables: international product prices, largely linked to crude oil, and the rand/dollar exchange rate. Any renewed geopolitical shock, supply disruption, or a push in crude back above US$120 per barrel could erase the current over-recovery.

The Department of Mineral Resources and Energy is due to confirm the official June fuel adjustments at month-end, with new prices taking effect in early June 2026. Investors should watch three signals over the coming weeks: Treasury’s final stance on levy relief into July, the durability of the rand’s gains, and whether diesel’s over-recovery holds up enough to lock in a sustained easing in logistics and agricultural input costs.

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