Major Supply Disruption in the Middle East
A significant factor affecting the global fuel market is the current conflict in the Middle East.
At the centre of this disruption is the Strait of Hormuz, a narrow shipping route in the Persian Gulf through which an estimated 21% of the world’s oil and fuel supply passes. Major energy producers such as Saudi Arabia, Iraq, Kuwait, Qatar, the UAE and Oman rely on this route to move their fuel to global markets.
Due to security concerns and the risk of attacks, shipping traffic through this area has largely stopped. As a result, a large portion of global fuel supply is currently unable to reach international markets.
This has created a ripple effect across the global energy system.
Refineries Facing Production Challenges
Refineries in the surrounding oil-producing countries are now experiencing storage constraints. Because fuel exports are limited, some refineries are being forced to reduce production.
In certain regions, production has already dropped significantly. For example, estimates suggest Iraq’s production has fallen by around 70%.
Refineries are highly complex operations. Once production is halted, restarting facilities can take considerable time and resources. This means the supply recovery process could take longer even after conditions improve.
In addition, some infrastructure in the region has reportedly suffered damage, creating further uncertainty around how quickly full production can resume.
Rising Global Demand Pressures
At the same time that supply is tightening, global demand is shifting.
China, the world’s second-largest economy, has historically sourced a large portion of its fuel from countries such as Iran and Venezuela, often at discounted rates.
Recent geopolitical developments have disrupted these supply channels, forcing China to source fuel from the open global market. Estimates suggest this could represent 20–25% of their previous supply needs.
When a major economy enters the open market seeking large volumes of fuel, it increases competition for available supply. This further drives global price pressure.
Why South Africa Is Especially Sensitive to These Changes
South Africa is particularly exposed to international fuel market movements for two key reasons.
Exchange Rate Impact
Fuel is purchased internationally in US dollars. This means the rand–dollar exchange rate plays a major role in determining local fuel prices.
Since the escalation of tensions in late February, the rand has weakened significantly against the dollar, increasing the cost of imported fuel.
Increased Dependence on Imports
South Africa previously had several operational refineries. However, due to declining refining capacity, the country now relies heavily on direct imports of finished fuel products such as petrol and diesel.
This means international price movements have a direct and immediate effect on local fuel pricing.
Rapid Increases in International Fuel Prices
Since the escalation of the conflict, international diesel and petrol prices have risen sharply.
Industry analysts note that the rate of increase seen recently is highly unusual. Combined with the weakening rand, these price movements are expected to significantly influence South Africa’s next regulated fuel price adjustment.
How Fuel Prices Are Calculated in South Africa
South Africa operates under a regulated fuel pricing system.
Prices are adjusted once per month, typically on the first Wednesday of the month. The price is calculated using an average of international fuel prices and exchange rates from the previous month.
Because of this calculation method, major price movements in the current month will directly influence the price change in the following month.
Current projections indicate that the potential price adjustment could be significantly higher than u
Possible Supply Pressure in the Months Ahead
The fuel currently available in South Africa was largely secured before the recent escalation. However, as new shipments are ordered at higher international prices and supply routes remain uncertain, the market could experience additional pressure.
Industry experts caution that supply constraints or rationing could become possible later in the month or in the coming months if global disruptions continue.
Looking Ahead
At present, the situation remains fluid. Much will depend on how long the current conflict continues and how quickly global supply routes can stabilise.
For businesses that rely heavily on fuel, particularly transport operators, the coming months may require careful planning around fuel purchasing and operational efficiency.
Join our upcoming Fuel Market Masterclass where our industry expert will unpack the current market situation and share practical advice for transporters navigating the months ahead: https://www.linkedin.com/events/7439665276847210497?viewAsMember=true
Resources
- https://www.moneyweb.co.za/news/south-africa/petrol-price-drops-in-august-but-diesel-climbs/#:~:text=According%20to%20a%20statement%20issued,up%2063%20cents%20per%20litre
- https://iol.co.za/news/south-africa/2025-05-22-the-poor-will-be-hit-hardest-treasury-slammed-for-increasing-fuel-levy-in-2025-budget-3-0/
- https://thestar.co.za/motoring/industry-news/2025-08-12-diesel-price-hiking-cycle-appears-to-be-over-with-relief-expected-in-september/
- https://www.news24.com/business/economy/petrol-diesel-prices-may-be-on-track-for-cuts-next-month-20250815-0716
- https://www.thesouthafrican.com/news/heres-the-good-petrol-and-great-diesel-price-forecast-for-september-2025/
