Angelika Goliger, Africa Chief Economist, at EY

Recent structural modelling from EY indicates that South African consumers and businesses face imminent and substantial fuel price shocks in the wake of heightened geopolitical tensions between Iran, the US, and Israel.

“These disruptions have hampered access to around 20% of global oil supply, directly threatening South Africa’s fuel security,” said Angelika Goliger, EY Africa Chief Economist.

Fuel Price Outlook

EY’s analysis points to a severe near-term upward shift for both petrol and diesel:

• Petrol: Currently averaging approximately R20 per litre, petrol is projected to rise by between R6.87 and R7.88 per litre at the next price adjustment. In a severe scenario, prices could reach as high as R32 per litre by the end of 2026.
• Diesel: Facing an even sharper short-term spike, diesel is expected to increase by R9.82 to R11.39 per litre. Risks for diesel are materially higher, with potential peaks of R35 per litre by early 2027, given its critical role in freight, logistics, mining, agriculture, and backup power generation.

Supply Vulnerabilities

South Africa remains highly exposed to these external shocks.

Roughly one-quarter of the country’s crude oil imports and nearly one-third of its total fuel supply are directly vulnerable to disruptions in the Strait of Hormuz.

A significant supply shock, combined with these record-level price increases, is becoming increasingly likely.

A Developing Economy Response

While global demand-management strategies often emphasise remote work and reduced travel, such measures face significant structural constraints in South Africa.

“Resilience during fuel shortages in the developing world is built not through idealised demand reduction, but through targeted efficiency measures and a realistic assessment of existing constraints,” said Goliger.

Recommended pragmatic interventions from the International Energy Agency (IEA) include prioritising public transport, protecting food and essential logistics, and providing limited, temporary fiscal relief to ease the pass-through of price shocks.

“While these suggestions are broadly sensible, they do not sufficiently account for developing-economy realities,” Goliger added.

“Structural constraints in contexts like South Africa limit the effectiveness of standard demand-side responses. Most employment is location-dependent — with only around 10–15% of the labour force able to work remotely.”

Oil demand is tightly linked to diesel-intensive sectors such as freight, mining, and agriculture. In addition, the scope for rapid behavioural or regulatory adjustments is limited by practical implementation and compliance challenges, rather than policy intent.

“These trade-offs are further intensified by limited fiscal space, which restricts many African governments, including South Africa’s, from sustaining broad price interventions without risking debt sustainability and broader budget stability,” Goliger concluded.

ENDS