South Africa has not escaped the fuel price shocks associated with disruptions to shipping in the Strait of Hormuz energy corridor and the damage to refinery and other infrastructure in the Gulf. And while it is difficult to fully assess the economic impacts, these are likely to be painful.

Already, the International Monetary Fund has downgraded South Africa’s 2026 growth outlook to only 1% from its pre-war projection of 1.4%, and the South African Reserve Bank is definitely scanning the horizon for any rise in inflation expectations. The bank, which is now targeting 3% inflation, with a one percentage point tolerance band on either side, is also unlikely to shy away from hiking interest rates should it believe such threats to be real.

As with all fuel importers, this pricing vulnerability is unavoidable, and the ability of governments to provide shock absorbers is always limited, but especially so in countries where fiscal buffers are either absent or in the process of being rebuilt.

In the case of South Africa, the fiscal position has improved, allowing for some fuel-levy relief. Nevertheless, the capacity to sustain such relief over the longer term is seriously constrained following the erosion of fiscal space by the successive shocks of State Capture, Covid and the energy spikes that followed Russia’s invasion of Ukraine.

Where South Africa has proved relatively resilient (at least thus far) has been on the supply front.

There have been some disruptions, especially ahead of the monthly price adjustments, but the fuel industry has been able to replenish supply.

This is important, because as we all learnt so painfully during the sustained period of electricity loadshedding, the cost of unserved energy is far higher than having access to higher-priced energy. That said, certain electricity intensive industries are now facing a real tariff crunch, while poor households have long passed the affordability tipping point.

Given the electricity experience, there is natural mistrust that security of fuel supply will be maintained. But the domestic ecosystem has, to date, proved relatively agile.

Ahead of the attack on Iran by the US and Israel, South Africa sourced about 60% of its final product from countries either directly or indirectly exposed to the Strait of Hormuz, while securing its crude mainly from the rest of Africa.

Although its crude sources have been largely unaffected, both government and industry have confirmed that there has been a dramatic change in the source of other fuels, especially diesel.

This shift toward the ‘Atlantic Basin’ has been facilitated by the diversified nature of the local fuel industry, which includes traders and is not overly reliant on a single national oil company. It also has implications for costs, however, which is why the basic fuel price formula for diesel has been reviewed to align it to the new source markets and their logistics and other costs.

In the longer term, resilience could be boosted further by having storage buffers for final product. But, again, that comes with costs.