South Africa Extends Fuel Tax Cuts to Shield Economy From Iran Conflict Impact

South Africa confirmed on Tuesday that it will prolong fuel tax reductions for an additional two months. This move aims to protect households from the global energy shock triggered by the war in Iran.

The relief is scheduled to conclude after June, with the state intending to recover lost revenue through other fiscal measures.

The International Energy Agency has described the current disruption to global oil supplies as the most significant in history. This has severely impacted countries like South Africa that rely heavily on imported fuel.

As global energy prices have surged, the government has stepped in to prevent domestic prices from rising even further.

The intervention began in late March with a one-month reduction in the general fuel levy for April. This relief has now been extended into May and June.

In April, the levy was reduced by 3 rand per litre for both petrol and diesel. For May, the reduction remains 3 rand for petrol but increases to 3.93 rand for diesel.

In June, the relief will be halved to 1.50 rand per litre for petrol and 1.96 rand per litre for diesel. The finance and petroleum ministries stated that the measure aims to address concerns regarding higher inflation and negative impacts on economic growth.

The government noted that the 17.2 billion rand in foregone tax would be funded by higher revenue and underspending.

South Africa's central bank previously flagged fuel-driven inflationary risks during its March meeting. Market expectations suggest there is scope for two 25-basis-point interest rate hikes later this year.

These tax cuts are intended to provide a buffer for the economy while the fiscal framework adopted in the 2026 budget remains unchanged.