South African Fuel Under-Recoveries Halve as Global Oil Markets Stabilize Amid Middle East War

Petrol under-recoveries drop by 67% but motorists still face hikes in May. Learn about the Treasury's plan for fuel tax relief extension amid Middle East war.

By: AXL Media

Published: Apr 17, 2026, 7:41 AM EDT

Source: Information for this report was sourced from BusinessTech

Petroleum Price Projections Recede from Early Month Record Highs

The latest snapshot from the Central Energy Fund (CEF) indicates a softening of the severe under-recoveries that characterized the beginning of April 2026. After starting the review period with staggering shortfalls, the deficit for petrol 95 and diesel has contracted by more than 50 percent. Specifically, petrol 95 under-recoveries have dropped to approximately R2.63 per litre, a 67 percent reduction from the month's opening peak. Despite this improvement, the current trajectory still points toward a significant retail price increase when the new fuel cycle commences on May 6.

Geopolitical Volatility and Damaged Infrastructure Slow Recovery Pace

Market analysts attribute the persistent under-recovery to the ongoing military conflict involving the United States, Israel, and Iran. According to Investec Chief Economist Annabel Bishop, while a fragile ceasefire has been discussed, markets remain skeptical of its longevity. The war has resulted in damaged energy infrastructure and impeded supply routes, particularly around the Strait of Hormuz. These disruptions have allowed international oil prices to retreat only gradually, contrasting with the near-instantaneous price surge witnessed when the conflict began in late February.

National Treasury Evaluates Extension of Emergency Fuel Levy Cuts

To mitigate the impact of the oil shock on consumers, Finance Minister Enoch Godongwana recently implemented a R3.00 per litre cut to the fuel levy for both petrol and diesel. Citigroup country economist Gina Schoeman suggests that South Africa possesses the necessary fiscal space to extend this relief for an additional two months. Such a move would likely cost the government between R10 billion and R12 billion. This extension is considered feasible due to prudent government spending, a revenue windfall from mining taxes, and the ability to utilize the National Treasury’s contingency reserves.