First, Some Definitions.
What is a commodity? Investopedia defines commodities as “essential raw materials used in the production of goods and are traded in large volumes”. Oil is a commodity, as is petrol and diesel - all of which the Middle East supplies in significant quantities to the world economy. The key point is that commodities are globally traded as standardized, interchangeable goods. Because commodities are standardized, the price of a commodity is the same wherever it is bought or sold. A barrel of oil costs the same, whether it comes from the Middle East or Nigeria.
What is crude oil? Crude oil is the most raw form of oil. Extraction methods vary, but in most cases a drill bores down into an underground oil deposit and pumps it out. It is not yet useful in this form. First it must be refined to produce usable fuels like petrol and diesel.
How do we get petrol and diesel? Large industrial processing facilities called “refineries” process raw, crude oil into various petroleum (oil-based) products including petrol, diesel, bitumen used to build roads, naphtha for plastics and petrochemicals, and even Vaseline among many others. These refined products—not the raw oil itself—is what we actually use. Some countries import crude oil and refine it themselves using their own refineries, while others will import finished petroleum-based products refined elsewhere. Middle Eastern nations both extract and refine their oil, exporting most of it.
Plenty of Crude, Not Enough Refining
You may be surprised to learn that most of South Africa’s crude oil does not come from the Middle East. In fact, 29% of our crude imports are sourced from Nigeria, followed closely by Saudi Arabia at 24%, with a number of smaller nations supplying the remainder. In the months ahead, South Africa may seek alternative suppliers or scale up imports from West Africa to compensate for any shortfall.
While the global price of crude will remain high, actual physical supply is unlikely to become a serious issue. This is not as comforting as it seems. Remember that crude oil needs to be refined first. Not every country will refine crude oil into every petroleum-based product they use (like petrol and diesel) at the scale necessary to meet domestic demand. If local production does not meet demand, the remainder must be imported.
Both petrol and diesel are refined within South Africa. However, we cannot refine crude oil into fuel at the scale necessary to operate our economy at full capacity. This means that the cars and trucks you see on the road everyday probably aren’t using fuel made in South Africa.
The Diesel Dependence
Our main diesel suppliers are India (20%), the United Arab Emirates (20%), Oman (20%), Bahrain (14%), and Saudi Arabia (8%). Petrol imports show a similar but less severe trend, with Middle Eastern nations accounting for 35% of supply.
Add it all up and that’s 62% of our imported diesel and 35% of our petrol coming from the same place. The International Energy Agency called the present crisis the biggest oil supply disruption ever. This is really bad. Finding alternative sources of fuel is neither quick nor easy. By value, diesel makes up 67% of total annual fuel imports with petrol at 23%. Not only are high fuel prices a problem but so is supply meaning we are vulnerable to shortages like those seen towards the end of March where many fuel stations ran dry.
As the crisis drags on, oil and fuel storage facilities across the Middle East will begin to fill to capacity. With the Strait closed and exports slowed, refineries will be forced to cut production by shuttering parts of their facilities. Slowing production is straightforward; restarting it is not. Bringing these facilities back online may take weeks, months, or even longer if they have sustained damage, as many already have. As I will discuss below, this is why South Africa’s closure of many of its refineries is so problematic.
Shooting Ourselves In The Foot: The South African Way
Over the past few years, South Africa has lost the bulk of its domestic refining capacity, with government playing a significant role in that decline. Since 2020, South Africa has lost 50% of its refining capacity with only 35% of our original capacity remaining as of 2025. Most of our fuels are now imported as finished products refined in the Middle East, as discussed previously.
Many nations maintain strategic fuel reserves to shield their economies from the kind of external supply shock we are experiencing today. When global oil prices surge, these nations can release a portion of their reserves into the economy at subsidized prices to absorb some of the shock.
In 2016, the South African government sold off a large portion of its strategic reserves. In 2020, the High Court ordered that the sale be reversed as the transaction was described as unlawful and a result of corruption. Today, South Africa’s reserves stand at 8 million barrels, only a fraction of our 45 million barrel capacity. 8 million barrels would last us roughly two weeks. However, our limited refining capacity means they would be of little practical value anyway.
Beyond this month’s temporary fuel levy reduction, which applies only to petrol, the government has limited tools to cushion against the impact higher fuel prices will have on inflation and the cost of living. The closure of many of South Africa’s refineries within the last ten years and the depletion of its strategic oil reserves has largely eliminated options the government should otherwise have had.
Now What?
I don’t know. Hope and pray?
Food inflation will rise, regardless of any measures implemented by government. South Africans must brace for a difficult year ahead as inflation erodes their standard of living as prices begin to rise.
While South Africa did not create this crisis, much of its severity could have been reduced if our energy infrastructure were better managed. We should have been better prepared.
Many say that when America sneezes, the world catches a cold. True enough. But in this case, South Africa has completely inhaled the sneeze—deeply, deliberately, and then asked for a second, just to be certain it caught every last drop. We have left ourselves at the mercy of others and will pay the price.