South Africa trims fuel tax amid global oil surge, prices still soar

South Africa cuts fuel tax to mitigate global price surge from US-Israeli war on Iran, but diesel, petrol, and kerosene prices still rise sharply.

South Africa has announced a temporary reduction in its fuel tax for one month in an effort to cushion the effects of surging global oil prices triggered by the US-Israeli war on Iran. In a joint statement, the country’s finance and petroleum ministers said the general fuel levy would be lowered by three rand ($0.18) per litre, providing some relief to consumers facing steep increases at the pump.
Despite the temporary tax cut, fuel prices are expected to rise significantly. Diesel prices will increase by more than seven rand per litre, marking a 40% jump, while petrol will rise by approximately 15%, though it remains cheaper than diesel. Kerosene, which is widely used by lower-income households for lighting, heating, and cooking, is set to surge by 93%, posing a serious cost burden for vulnerable populations.
The government estimated that the measure will cost about six billion rand ($352 million) in lost revenue. Officials emphasised that the plan is intended to be fiscally neutral, with the losses recouped through adjustments elsewhere in the budget. However, Finance Minister Enoch Godongwana admitted that it was not immediately clear where the funds would come from to balance the budget in the short term.
Last year, a proposal to raise value-added tax had caused tensions within the coalition government formed by the African National Congress following the May 2024 general election. Authorities indicated that broader support measures are being developed to assist households and key sectors of the economy affected by rising fuel costs.
The surge in global oil prices is largely attributed to disruptions in tanker shipping through the Strait of Hormuz blockade, which have followed the outbreak of the US-Israeli war on Iran. These disruptions have caused alarm in the global energy market and raised concerns over potential shortages.
While South Africa has largely avoided widespread fuel queues, some petrol stations did report temporary shortages as motorists rushed to fill up ahead of the price increases. The steep rise in fuel costs has also prompted the country’s minibus taxi operators—the primary form of public transport—to threaten fare hikes, which could increase transportation costs for daily commuters and place further strain on household budgets.
The government’s temporary fuel tax cut, combined with ongoing efforts to develop broader economic support measures, reflects an attempt to mitigate the immediate impact of global energy shocks while maintaining fiscal stability. However, the high cost of essential fuels like diesel, petrol, and kerosene highlights the continuing vulnerability of South African consumers to fluctuations in the international oil market and underscores the broader economic challenges posed by geopolitical conflicts in the Middle East.