Fuel prices surge as global tensions escalate
Fuel prices surge as global tensions escalate
Global tensions in the Middle East are sending shockwaves through oil markets, with direct consequences for South Africa. As fuel prices, supply and economic stability hang in the balance, understanding these impacts is essential. SHARMINI NAIDOO unpacks the situation.
From as early as the 1870s, South Africa has been part of the global economy. It suffered isolation during the apartheid era but is now fully integrated back into the global economy, which has allowed it access to international markets. With the global economy under major threat due to the Middle East conflict, South Africa is also impacted. Burying one’s head in the sand will not help; we will all be affected sooner or later.
The war’s impact on oil supply
Following the closure of the Strait of Hormuz and threats of attacks on energy infrastructure in the Gulf region, the International Energy Agency (IEA)* issued a warning that “The US-Israeli war on Iran could trigger the worst energy crisis the world has ever seen.”
Saudi Arabia, Iraq, the United Arab Emirates (UAE), Iran, Kuwait and Qatar are active participants in the war and are among the major oil-producing countries in the Middle East. Collectively, they hold a significant portion of the world’s oil reserves – and many utilise the Strait of Hormuz for exports.
Although Iran has now granted “non-hostile vessels” access to the Strait of Hormuz, the disruption to oil supply has been very costly, halting daily transport of over 20 million barrels – roughly one-fifth of global petroleum consumption. Even though the Organization of the Petroleum Exporting Countries (OPEC) partners agreed to release strategic reserves (400 million barrels) to mitigate price shocks, Brent crude prices have soared, and we must brace ourselves for the impact.
Oil price impact on world markets
Since the start of the war, the Brent crude price spiked from $66/barrel to over $100/barrel, then dipped to $98/barrel after the US call for peace talks. However, with Iran rejecting the 15-point peace plan (at the time of writing), a ceasefire seems unlikely, so prices will continue to spiral, inevitably placing strain on consumption around the world.
The current local scenario
South Africa has no crude oil reserves and requires roughly 13 billion litres/year of crude oil and about 19 billion litres of finished petroleum products, all of which are imported.
Most of our crude oil is imported from within Africa: Nigeria was the largest supplier in 2025 (36%), followed by Angola (20%), the US (14%) and Saudi Arabia (13%). Other percentages can be seen in the top left graph on the next page.
Most of our refined petroleum products (diesel and petrol) come from large international refining hubs, primarily in the Middle East and Asia. Due to declining local refining capacity, South Africa now relies on imports for its petroleum products. The splits for diesel, petrol and illuminating kerosene can be seen in the accompanying graphs on the next page.
Availability of supply
According to the Fuel Industry Association of South Africa (FIASA), national fuel supply remains stable and there is adequate availability of all major petroleum products across the country. Liquefied petroleum gas (LPG) supply also remains stable.
Concerns over diesel shortages and the expected price hike resulted in artificially inflated demand due to panic buying and hoarding, which saw some forecourts run dry, but this is expected to stabilise through normal procurement and demand management processes.
Despite all the drama about strategic oil reserves being sold secretly to privately owned companies at heavily discounted prices between December 2015 and January 2016, South Africa still has 7.7 to 8 billion barrels of strategic crude oil reserves in stock and sufficient supply available from outside of the Middle East to meet the country’s needs.
The press release issued by the Department of Mineral and Petroleum Resources (DMPR) on 10 March assured the public that “there is currently no immediate risk of fuel shortages in South Africa,” and called for “urgent calm”. The two operational crude oil refineries – National Petroleum Refiners of South Africa (Natref) and Astron Energy – and the Sasol Secunda coal-to-liquids plant are continuing to play a critical role in domestic fuel production. The Astron Energy refinery is currently undergoing a planned maintenance shutdown, but the company has secured sufficient fuel imports to cover supply requirements during this period.
Volatility in fuel price
The more pressing concern now is probably not supply availability, but rather price uncertainty and the imminent fuel price increase at the pump. The DMPR announced the new price increases on 1 April, as follows:
• Petrol 93 and Petrol 95: +R3.06/litre
• Diesel 0.05% (wholesale): +R7.37/litre
• Diesel 0.005% (wholesale): +R7.51/litre
• Illuminating paraffin: +R11.67/litre
The key contributing factors cited for the increase are international oil prices, currency weakness against the dollar and annual tax adjustments of 21c/litre from the Budget Speech that were supposed to be implemented (increases to the General Fuel Levy (9c), Road Accident Fund levy (7c) and Carbon Fuel Levy (5c)).
As an interim measure, government will temporarily reduce the General Fuel Levy (GFL) by R3.00/litre for both petrol (to R1.10/litre) and diesel (to R0.93/litre) from 1 April to 5 May 2026 to cushion consumers from a sharp, record-high fuel price surge caused by geopolitical conflict.
This temporary, one-month tax break is expected to cost the state approximately R6 billion in revenue, aimed at protecting households and businesses from severe price shocks. According to the joint media statement by ministers Enoch Godongwana and Gwede Mantashe, this relief measure will be re-evaluated on a monthly basis for the following two months. It is specifically designed to be fiscally neutral, and the government will implement mechanisms to recoup the foregone revenue within the fiscal framework approved during the 2026 Budget.
Breakdown of SA’s fuel price
In South Africa, the fuel price at the pump is composed of the Basic Fuel Price (BFP), domestic levies, taxes and margins.
Key components are as follows:
The BFP: This reflects the cost of buying crude oil, refining it and transporting it to South African depots. It changes every month and is based on global oil prices (Brent crude), the rand/dollar exchange rate and shipping costs from source to South African ports. It comprises:
• Free on Board (FOB), the price of petroleum products on board the vessel and ready to depart (89%); freight (9%); and finance cost (1%)
• Storage (1%), demurrage (0.4%) and cargo dues (0.2%)
• Ocean loss (0.3%)
• Insurance (0.2%)
Local elements (levies and taxes): Domestic levies, mostly adjusted each April, form a large part of what consumers pay for fuel and include government-mandated taxes and regulated costs, primarily:
• The GFL, a tax used for the National Revenue Fund – not just for roads.
• The Road Accident Fund (RAF) levy, which funds third-party insurance for road users. To address the RAF’s financial deficit, effective 1 April 2026, the levy increased by 7c/litre for both petrol and diesel, bringing the totals to R2.25/litre.
• The carbon tax levy, which is linked to the Carbon Tax Act to reduce pollution and carbon emissions. As of 1 April 2026, this increased by 5c (to 19c/litre) for petrol and by 6c (to 23c/litre) for diesel.
• The customs and excise duty, which remained at 4c/litre.
Administered margins: These cover industry costs and profits, including retail margins for service station owners and wholesale margins, as well as secondary storage and distribution costs. Primary transport via pipelines and tankers, secondary storage margins and secondary distribution margins, as well as retail margins, are all regulated by the DMPR.
Other levies: Including the Slate Levy – a temporary adjustment managed by the DMPR – these self-adjust monthly to compensate for under- and over-recoveries due to daily price fluctuations. The Slate Levy of 0.00c/litre from March remained in place for April.
With diesel being unregulated, price differences will naturally occur among sites, as wholesalers and retailers have the latitude to charge their own selling prices. The DMPR does publish a monthly reference price for diesel, but this is merely a guideline.
“Energy lockdown” on the cards?
A term currently trending on social media is “energy lockdown”, referring to fuel conservation. This draws a parallel to the Covid pandemic lockdown, as these measures could ultimately affect day-to-day living and commuting. Although some governments have already started implementing strict fuel rationing and operational restrictions, South Africa is not – and will hopefully never be – one of them.
With fuel hikes a reality and all indications being that prices will continue to rise sharply in the near future, the DMPR and FIASA have recommended fuel-saving tips in line with the IEA:
• Drive smoothly, avoiding rapid acceleration and braking
• Keep tyres properly inflated
• Combine trips to reduce mileage
• Use fuel-efficient routes and avoid peak traffic
• Carpool or use public transport where possible
• Work from home
• Efficient driving for commercial vehicles and deliveries
Possible government intervention measures
As a country that is heavily reliant on fuel – particularly in the transport industry, where diesel is the lifeblood – these hikes will undoubtedly hurt everyone as costs filter through to transport, ports, storage, inflation, interest rates, food prices and other commodities.
There have been numerous calls by industry, political parties and unions for Treasury to suspend the fuel levy, reduce it by 50% and scrap certain taxes to cushion the blow and bring immediate relief to consumers. However, the fuel levy is a significant revenue source, generating over R93 billion in 2023/24, and – due to current fiscal constraints – it will be difficult for Treasury to implement such reductions without impacting the national budget. Although non-committal on possible intervention measures, government is at least exploring ways of softening the impact.
*The IEA is a Paris-based autonomous intergovernmental organisation that provides policy recommendations, analysis and data on the global energy sector. Its 32 member and 13 associate countries represent 75% of global energy demand.
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