What to expect for petrol and diesel prices in 2024
Despite February looking set for a slight hike in petrol and diesel prices, forecasts for the year ahead point to a more stable environment, generally, which should bring some relief after a turbulent 2022 and 2023.
Investec Chief Economist Annabel Bishop said that the average price of Brent crude oil has dropped from an average of $82.1/bbl in 2023 to an average of $77.6/bbl in January as concerns about weakening global growth and demand persist.
“Globally, commodity prices overall are expected to be suppressed this year due to the marked slowdown in world growth (from around 3.0% y/y in 2023 to 2.6% y/y in 2024 – World Bank forecasts), although there are notable risks,” Bishop said.
“Speculative trading has seen oil prices suppressed, as previously OPEC controlled oil prices by alternating supply to the market, but markets more recently now expect that a lessening of supply will not be met with higher prices due to flagging demand.”
Despite the drop in global oil relative to 2023 prices, South Africans should expect a slight increase next month off the back of higher prices in the short term.
As per the Central Energy Fund’s latest mid-month snapshot, petrol is expected to climb by between 11 and 14 cents per litre, while diesel is showing a possible hike of 3 to 9 cents per litre next month. The inland prices can be found below:
The World Bank warned that the weaker-than-projected growth from China could cause a sharper deceleration in global economic activity than expected. This echoed market concerns, which undercut the oil price.
“We expect the oil price to be flattish in 2024, averaging below US$80.0/bbl (Brent crude), but at risk of volatility given the danger of geopolitical conflicts exacerbating, while global growth could slow by more than expected as China weakens further,” Bishop said.
“The recovery of trade now projected for 2021-24 is the weakest following a global recession in the past half-century. Further trade defragmentation is a risk, as trade policies have become more restrictive, with negative impacts to supply chains.”
Although the drop in the oil price in December and January highlights the market concerns over world growth, Bishop said that the global economy is not expected to fall into a recession.
Petrol price changes also have a large and immediate effect on the nation’s inflation print, which is expected to hit the South African Reserve Bank’s (SARB’s) midpoint of 4.5% this year.
“While fuel and food prices are strong drivers of inflation, this year is currently expected to see a more subdued oil price, which consequently should cause less volatility in SA’s petrol prices and so in its inflation rates,” Bishop said.
