JOHANNESBURG - South Africa's Finance Minister ‌Enoch Godongwana is considering lowering the fuel levy to cushion the impact of the Iran war ​on domestic fuel prices, a senior government official told Reuters.

Godongwana will announce his decision on Tuesday ​before monthly fuel ​price adjustments take effect on Wednesday, the official said, asking not to be named because of the sensitivity of the matter.

The general fuel levy was ⁠set to rise slightly from April 1, to about 4 rand a litre for both petrol and diesel, according to last month's budget.

Trade unions, business lobby groups and political parties have urged the government to intervene to limit fuel price hikes driven by ​the surge ‌in global energy ⁠prices since the U.S.-Israeli ⁠war against Iran.

FUEL LEVY CUT COULD MIRROR 2022 MOVE

An energy official, who also spoke on ​condition of anonymity, said the government was considering relief similar ‌to a 2022 decision to temporarily cut the general ⁠fuel levy following the start of Russia's war in Ukraine.

That reduction of 1.5 rand per litre remained in place for several months before being lowered and then withdrawn.

South Africa's central bank warned of inflationary risks from rising fuel prices at its monetary policy meeting last week, saying fuel inflation of more than 18% was expected in the second quarter.

The risk-sensitive rand has fallen more than 6% against the dollar since the Middle East conflict erupted, adding to upward pressure on pump prices.

EXPOSED ‌TO GLOBAL ENERGY SHOCK

South Africa imports most of its ⁠petroleum products, leaving it highly exposed to swings in global ​energy prices.

Africa's biggest economy adjusts fuel prices monthly using a formula that factors in movements in global crude oil prices, the exchange rate and local taxes such as the ​fuel levy. Price changes ‌take effect on the first Wednesday of every month.