Hostilities in the Gulf region are disrupting global oil markets, posing significant risks to SA’s fuel supply and increasing household expenses.
Due to SA’s reliance on Gulf oil imports, regional conflict quickly results in domestic economic challenges.
SA’s reliance on imported liquid fuels and diesel-fired power stations heightens the gravity of the current situation.
These dependencies leave the country vulnerable to global market shocks, allowing distant geopolitical instability to affect local transport costs, food prices, energy security and household welfare.
Global crude oil premiums are rising as traders assess risks to key shipping lanes.
This trend is expected to push up South African fuel prices, given the country’s dependence on imported petroleum.
In the short term, consumers are likely to face higher insurance and freight charges.
The consequences of higher fuel prices extend beyond fuel stations, driving up transport fares, food prices and industrial costs.
Sectors such as mining, agriculture, logistics and manufacturing are particularly vulnerable because of their heavy reliance on diesel.
As diesel prices rise, these industries may see profit margins squeezed, investment decline and potential job losses.
The electricity grid faces heightened risk.
Eskom relies on diesel to run open-cycle gas turbines during periods of high demand or supply shortages.
These turbines played a critical role in limiting load-shedding last summer and require affordable, readily available diesel.
Eskom states that diesel use in its open-cycle gas turbines is limited and managed strategically.
If Gulf disruptions make diesel more expensive or less accessible, Eskom may need to adjust turbine operations or revise cost management strategies.
Higher costs would further strain public finances and electricity tariffs, while reduced turbine use would increase the risk of blackouts, especially in winter when demand rises and solar generation falls.
Currency fluctuations pose an additional vulnerability, as global crises often prompt investors to seek more stable currencies.
This dynamic puts downward pressure on emerging-market currencies such as the rand, raising the cost of imported oil and intensifying fuel price increases, even when international oil prices rise only slightly.
Securing diesel and refined fuels from outside the Gulf region, such as West African crude and other non-Gulf suppliers, is recommended.
Proactive implementation of these measures can reduce reliance on the Gulf and strengthen SA’s energy security.
Targeted, time-limited assistance measures are needed to protect vulnerable households.
The department of mineral resources and energy has indicated that fuel price adjustments are under way.
Potential interventions include temporary support for minibus-taxi fares and measures to shield basic food prices from fuel-related increases.
Short-term adjustments to the fuel levy may also provide relief.
However, these initiatives must be balanced against the need to maintain fiscal stability.
Transparent public communication is critical.
The government should regularly update the public on diesel inventories and power station utilisation, and disclose the components of the pump price, including crude oil costs, exchange rates and fuel levies.
Open communication helps reduce speculation and panic buying while supporting effective planning.
The current crisis highlights vulnerabilities in SA’s energy sector, including an ageing refining industry, limited fuel reserves, excessive reliance on diesel, and insufficient public transport infrastructure.
These structural challenges heighten the country’s susceptibility to Gulf-related shocks and emphasise the need for long-term reform.
SA should gradually rebuild its strategic fuel stockpile under transparent and impartial governance.
Accelerating private renewable energy projects and reducing reliance on diesel are also critical.
Electrifying public transport where feasible and publishing real-time energy dashboards can further inform market expectations during periods of disruption.
Implementing reforms takes time.
Governments and businesses that respond promptly will be better placed to withstand future shocks, which are increasingly likely given persistent instability in the Gulf region.
This article draws on analyses from the South African Reserve Bank, National Treasury, the department of mineral resources and energy, Eskom, and the International Energy Agency.
Mlandu Z Kona serves as an advocate, traditional leader, public sector executive and governance and ethics practitioner.