South African countries are facing growing risks to global oil supplies, drawing close attention to limited strategic crude oil reserves. motorists are bracing for record fuel prices, while the International Energy Agency (IEA) warns that global oil stocks are depleting.
In August, global oil stocks fell further by 95 million barrels, increasing the total draw since the conflict to 507 million barrels, or an average of 2.8 million barrels per day. As oil flows through the Strait of Hormuz remain significantly below normal, and the global refining system is already overloaded, the IEA notes the rapid depletion of buffer stocks.
The fuel crisis raises questions about South Africa's ability to withstand disruptions in global oil supplies, especially given its limited strategic crude oil reserves and increasing reliance on imported petroleum products.
Strategic Crude Oil Reserves in South Africa
Mantashe informed Parliament that South Africa currently holds a strategic fuel reserve of 6.9 million barrels, sufficient to cover crude oil needs for approximately 30 days. He assured that despite disruptions caused by the Middle East conflict and risks around the Strait of Hormuz, there is no threat to the country's fuel security. Mantashe also emphasized that South Africa has diversified its supply sources to reduce dependence on the Middle East.
Nevertheless, he acknowledged the country's vulnerability due to reduced domestic refining capacity. He specified that Sasol's production capacity covers 40% of the country's needs, with the remaining sixty percent coming from imports.
The government plans to reach a target storage level of 60 days. It was previously reported that South Africa is taking steps to strengthen energy security and reduce dependence on fuel imports. Mantashe had previously outlined government plans to create strategic fuel reserves equivalent to 60 days of net fuel imports, as well as to accelerate oil and gas exploration and implement regulatory reforms in the oil and gas sector.
He explained that the 60-day storage plan aims to ensure sufficient reserves of crude oil and refined fuel to protect the country from market shocks and global supply disruptions. Mantashe noted that in 2024, the Department conducted a comprehensive assessment of South Africa's strategic petroleum product reserve vulnerabilities. The study identified areas requiring urgent attention, including the need to strengthen reserve storage mechanisms and increase domestic refining capacity. In response, a draft Strategic Petroleum Product Reserve Policy was developed, which is ready for Cabinet review before public consultation.
According to this policy, a mixed storage model will be implemented, where the South African National Petroleum Corporation (SANPC) will be responsible for maintaining strategic reserves equivalent to 60 days of net imports of both crude oil and refined products.
Closure of Refineries Increases Import Dependence
The reduction in domestic refining capacity has also impacted the country. According to the South African Reserve Bank, South Africa's shift to importing refined petroleum products has increased the cost of meeting the country's fuel needs. The central bank estimates that the bill for oil imports could have been approximately 76 billion rand lower between 2021 and 2024 if refined petroleum products constituted no more than 25% of the total oil import volume.
Furthermore, the closure of refineries has led to a reduction in related industrial production by approximately 20% since 2019, displaced about 5,400 direct and indirect jobs, and prompted companies to postpone investments. In contrast, regional and global competitors are expanding capacity through new mega-refineries, making South Africa increasingly dependent on imports and highlighting the need for a coordinated policy response to restore energy system resilience.
A sharp rise in fuel prices is expected. South Africans will face another significant increase in fuel prices this month as international oil prices remain high, and gasoline and diesel prices are expected to reach record levels. Minister of Minerals and Energy Gweed Mantashe dashed the hopes of millions of South Africans who were counting on government intervention, stating there are no immediate plans to mitigate the impact of rising fuel prices on households and businesses.
Mantashe stated: 'Currently, no intervention measures are planned, partly due to the ongoing volatility in petroleum product prices.' He added that 'the department continues to administer fuel prices transparently, as prescribed by law.' It is anticipated that the latest fuel price increases will reach a record level, with recent data from the Central Energy Fund indicating an increase of more than 3 rand per liter for some grades of gasoline and diesel. This increase has caused concern among businesses, drivers, and consumers who are already feeling the pressure of the rising cost of living.