South African motorists face steep fuel price increases in May despite the US-Iran ceasefire that sent oil prices plunging on Wednesday. The Department of Mineral Resources and Energy will announce the final adjustment on 6 May.

Why it matters: Fuel prices flow through to the cost of everything South Africans buy. Transport costs drive food prices, logistics costs, and commuting expenses. A double-digit diesel increase would hit the economy at every level, from trucking companies to taxi operators to subsistence farmers.

The projections

Early data from the Central Energy Fund shows petrol 95 octane tracking an increase of 439 cents per litre, with 93 octane up 397 cents. Diesel faces an increase of between 1,251 and 1,257 cents per litre. Illuminating paraffin, used by the country’s poorest households, could rise by 1,007 cents.

These projections are based on Brent crude averaging around $111 per barrel during April’s pricing window. If the ceasefire holds and oil stays below $100, the final numbers could moderate significantly.

The levy problem

Compounding the issue is the scheduled expiry of a R3-per-litre general fuel levy cut on 6 May. The government introduced the cut as emergency relief when the Iran crisis began pushing prices higher. Its expiry adds R3 per litre on top of whatever increase the oil price delivers.

Finance Minister Enoch Godongwana has not indicated whether the relief will be extended. Treasury has signalled that the fiscus cannot sustain the revenue loss indefinitely.

The other side

Some energy economists argue that the ceasefire has already changed the calculation. Oil dropped more than 15% on Wednesday. If prices remain at current levels for the rest of April, the projected increases could be cut substantially.

Others warn against optimism. The ceasefire is temporary, lasting only two weeks. A breakdown in talks could send prices back above $110, locking in the worst-case scenario for May’s fuel adjustment.

What happens next

The final fuel price is set using a rolling average of international oil prices and the rand-dollar exchange rate over the pricing window. South Africans will know the definitive number on 6 May. Until then, the ceasefire’s durability is the single biggest variable.