SA's Fuel Reserve Runs on Fumes as Gulf Oil Supplies Risk Soaring
The price of Brent crude has risen above $100 a barrel due to increased risks in Gulf oil supplies. Two key events contributed to this increase: Saudi Arabia's decision to shut down its East-West crude pipeline following a drone strike, and an advance by Iran-aligned Houthi forces in Yemen, which gives them the capacity to close a key artery for Gulf oil.
South Africa has allowed its strategic reserves to dwindle to 8 million barrels of crude oil, held in storage at Saldanha Bay with a total capacity of 45 million barrels. This reserve is enough for only 13 days (or roughly 18 days including Sasol's coal-based output) of the country's daily needs.
The Department of Mineral and Petroleum Resources has devised a draft Strategic Petroleum Stocks Policy to build up reserves to between 60 days' and 90 days' supply. However, implementation is managed by the state-owned South African National Petroleum Company (SANPC), which was established in 2025 through the merger of the Strategic Fuel Fund, PetroSA, and iGas.
The historical record suggests that the SANPC or the Department may not be trusted with this task. In 2015/16, the Strategic Fuel Fund sold off the country's strategic reserve at $28 a barrel, well below the prevailing market price, in contracts that were economically unwise and irregular and corrupt.
The high court found that the conduct of Sibusiso Gamede, CEO of the SFF, was 'riddled with irregularities' and that he had misled the Minister, who failed to apply her mind in approving the sale. The SFF itself was also culpable, as Mr Gamede could not have achieved what he did without the acquiescence or supineness of its senior managers and directors.