The world supply of crude oil had reduced. up to about 7.5% To 10.1% As described by the World Bank by March 2026 The largest oil market disruption in history. This decline was a result of the attacks on Iran by Israel and the US and the subsequent closure of the Strait of Hormuz.

No country was spared from its influence. For some, the economic consequences have been dramatic. In the case of South Africa, Which imports all its oil and 81% of petrol, diesel and paraffin Consumption, the impact has so far been felt mainly on price. Due to this the government has had to give subsidy on petrol and diesel.

In this article we explore the problems with official data, the mismanagement of strategic stocks and the potential for growth of domestic oil and gas supplies.

Read more: Iran war exposes South Africa's diesel dependence: what went wrong?

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We both have been closely associated in the energy sector for some decades. Rod Crompton teaches and researches the subject. Prior to this he was responsible for fuel price regulation and strategic stocks at the Department of Minerals and Energy before serving for 11 years on the board of South Africa's national energy regulator. Before joining academia, Bruce Young spent 30 years at petrochemical giant Sasol.

Our analysis on the current situation is that South Africans should be concerned about the fact that the quality of fuel data is very poor and the country only has an idea of ​​where it stands in relation to fuel reserves. Based on my reading of the situation, it seems that the government has little idea of ​​how much trouble it is in.

As a small player in a large global market, not knowing exactly how much fuel your country needs is a problem. And not having sufficient strategic reserves leaves the country vulnerable to global shortages caused by the Iran war.

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There are major challenges in the data of fuel reserves and requirements. For example, the Fuel Industry Association of South Africa 2024 annual report Data shows that net imports of petrol, diesel and kerosene were 81% of consumption, based on data it has been claimed that diesel imports were 118% of consumption. According to this data set, LPG imports accounted for a staggering 1,685% of consumption. These are obviously highly improbable numbers. Fuel industry data is based on official sources (South African Revenue Service and Department of Mineral Resources and Energy).

Furthermore, the national treasure is Connected Regarding discrepancies between actual and reported imports. It is also concerned about the illegal “spiking” of diesel with paraffin, which has a low tax rate, with cases reaching 68%.

According to the South African Revenue Service, organized criminal networks smuggle and illegally adulterate fuel and many fuel-storage and distribution depots are all involved in the adulteration of fuel products. Fuel adulteration causes huge losses According to the Commission for International Trade Administration, approximately R3.6 billion (US$220.5 million) per year..

There are also concerns about crude oil reserves.

Many countries keep strategic reserves of crude oil for incidents like an Iran war. International Energy Agency orders Its member countries will have to ban oil imports for 90 days. south african Policy Considering Sasol's production of synthetic fuel from coal, “at least three months' total consumption” is required.

South Africa's strategic crude oil storage capacity is sufficient and can meet 88 days of consumption. But tank capacity is not the same as stock.

Strategic stocks are kept secret. The country's Strategic Fuel Fund goes to Parliament through the Portfolio Committee on Mineral and Petroleum Resources. Although the quantity of the stock was not disclosed, The committee expressed concern in its report of March 2025 Regarding “insufficient” strategic fuel reserves.

South Africa currently appears to have only 7.7 million to 8 million barrels. International news agency Reuters in May 2025 informed South Africa had strategic crude oil reserves of about 7.7 million barrels. local reports About 8 million barrels are mentioned.

The 8 million barrels would last only 13 days against total liquid-fuel demand of about 600,000 barrels per day, or about 18 days if output from Sasol's coal-fired production. Estimated at 150,000 barrels per day. Sasol's coal-to-liquids plants were built by the apartheid regime in the 1970s and 1980s despite anti-apartheid oil embargoes. Sasol was gradually privatized from 1979 with substantial state guarantees.

There is an additional problem besides what is actually being kept in stock. Storage is concentrated on the western coast of Saldanha Gulf and there is no readily available means of transporting crude across the country to the oil refinery at Sasolburg, which is 1,400 km away.

South Africa's second weakness in fuel matters is the lack of inland storage capacity for refined products. The country imports most of its refined products. Storage capacity is concentrated at the country's major ports, far from its industrial heartland.

The need for more strategically placed storage capacity was identified Moeren probe panel to probe fuel supply shortage More than 20 years ago. The panel was established in response to the 2005 fuel supply crisis. The panel recommended that South Africa review its strategic stock policy and strengthen refined product stockholding requirements.

It also said that despite increasing dependence on imported petroleum products, the country lacks strategic refined fuel reserves.

But action was never taken on these recommendations.

What role, if any, can the private sector play?

Fuel price regulations provide for oil companies to hold stocks. Producers and importers are paid for holding 25 days of stock and wholesalers for holding 14 days of stock through pricing rules. But we don't know if they actually do because the business imperative is to keep it as low as possible and the government doesn't seem to have the capacity to monitor it.

Nor is private sector storage an option. Oil companies and large fuel users have tanks at refineries, import terminals, depots, airports, mines, farms, factories, and logistics sites. But it's mostly operational storage. It is product-specific, commercially committed and designed to keep the fuel moving through the supply chain. It is not designed to provide long-term national cover.

Administration of strategic shares

The governance of strategic shares is a vexed issue.

South Africa has already experienced a major administrative failure relating to its strategic crude oil reserves. In 2015/16 the state-owned Strategic Fuel Fund sold approximately 10 million barrels of strategic crude oil to commodity traders including Vitol, Talaveras and Venus Reyes. Western Cape High Court later keep transactions separateIt was found to have been conducted illegally and without proper approval or oversight.

Critics argued that the transaction effectively depleted South Africa's emergency reserves through a secretive and poorly governed process, which primarily benefited oil traders and middlemen.

The episode exposed serious weaknesses in the administration of South Africa's strategic fuel reserves. These concerns have never completely gone away. Parliamentary oversight processes continued in 2025 raise concerns Regarding reserve adequacy, underutilization of storage infrastructure, fragmented governance and unresolved oversight and accountability issues.