Government steps in as fuel shock hits

The government said on Tuesday that it would temporarily reduce its general fuel levy by R3/l for one month to offset the impact of the Iran war on domestic fuel prices.

However, the move was still not enough to prevent petrol and diesel prices surging on Wednesday, with diesel set to cost up to R7.51/l more and threatening to cause a spike in inflation. Without the intervention, diesel would have climbed by more than R10/l.

The following price adjustments will take place at midnight on 1 April:

• Diesel 500ppm%: Increase of R7.37/l
• Diesel 50ppm: Increase of R7.51/l
• Petrol 93 and 95 octane: Increase of R3.06/l

Government said the short-term relief is designed in a way that it will be fiscally neutral, with the government recouping the foregone tax revenue via other mechanisms, the finance and petroleum ministers said in a joint statement.

The statement added that the government was working on a broader package of measures to support households and key sectors of the economy.

The relief comes on the eve of what is expected to be the largest single monthly fuel price adjustment in South African history.

Before the cut to the levy, Central Energy Fund data had pointed to petrol increases of more than R5/l and diesel increases of about R10/l, driven by the war’s impact on global oil markets. The increases would have been compounded by a 21c/l tax hike — split across the general fuel levy, carbon levy and Road Accident Fund levy — announced in the February budget.

Standstill

The US-Israeli military strikes on Iran, which began on 28 February, triggered Iran’s effective closure of the Strait of Hormuz, the narrow waterway between Iran and Oman through which roughly a fifth of global oil supply normally passes.

Tanker traffic through the strait has slowed to a near standstill, removing an estimated 10 million barrels a day of Gulf oil production from the market.

Brent crude has surged about 55% in March alone — a record monthly gain — rising from around US$73/barrel at the start of the conflict to above $115 by late March. The International Energy Agency has described the disruption as the largest in the history of the global oil market.

Read: War kills rate cut hopes as Reserve Bank warns of inflation spike

For South Africa, the impact is direct and severe. Diesel — which powers the country’s freight, mining and logistics sectors — is worst hit.

FNB and the South African Reserve Bank have warned that the fuel shock could keep inflation elevated and delay interest rate cuts, stalling the country’s fragile economic recovery.

President Cyril Ramaphosa said on Sunday he had instructed finance minister Enoch Godongwana to develop urgent interventions, and a ministerial task team has been established to examine the broader economic fallout.  — (c) 2026 Reuters, with additional reporting (c) 2026 NewsCentral Media