Gwede Mantashe, Iran, and the strange Strait of Hormuz claim

South Africa may be spared from a potential fuel shortage thanks to its ties to the Iranian regime, said Mineral and Petroleum Resources Minister Gwede Mantashe.

The closing of the Strait of Hormuz, as a result of US-Israeli drone strikes on various Iranian targets, has greatly disrupted the global oil market.

South Africa is set to feel these disruptions on 1 April, with petrol and diesel prices expected to increase by over R5 and R9 per litre, respectively. Some experts have also predicted that more price increases will follow in May, further straining motorists’ wallets.

Despite this, some good news has supposedly emerged with regard to the question of South Africa’s oil supply and reserves.

Answering questions before the National Assembly, Mantashe said Iran has reportedly allowed safe passage through the Strait of Hormuz for ships from certain countries.

“I am sure if you monitor the news, you will appreciate that the Strait of Hormuz allows cargo that goes to South Africa without interruption,” Mantashe said.

“So, that means we have a chance to maintain a stable supply for a long period of time. There should be no panic in South Africa.”

Mantashe added that countries seeking to transport cargo safely through the Strait must meet two criteria set by the Iranian government.

Countries must not have an alliance or partnership with the United States or Israel, and they must pay the Iranian government in rials instead of dollars.

In spite of pressure from the United States to sever ties, South Africa’s longstanding relationship with Iran should allow it to continue operating within the Strait.

While this may not stem the tide of the expected price increases, it may potentially quell the expected fuel shortage, which has been a concern for many South African citizens.

“Despite the heightened geopolitical risk, including the disruption to the Middle East shipping routes, the Republic’s current petroleum supply security arrangement remains robust,” Mantashe said.

Experts remain sceptical

While many South Africans would take this news as a good sign, some remain unsure of how exactly this will play out in practice.

Bowmans head of ports, rail and logistics, Andrew Pike, discussed his scepticism about how South African oil would travel through the Strait in a recent interview with BusinessDayTV.

“I’m not sure how that’s going to work,” Pike said. “I’m pretty sure it won’t be allowed through if it’s being carried, for instance, by a US ship or any of the allied ships.”

“I’m also not sure that a ship owner would want to go through there anyway with mines drifting around. Maybe you’re guaranteed not to be hit by a missile, but I don’t know if you’re guaranteed not to bump into a mine somewhere along the line.”

Pike explained that all ships moving through the Strait, South African or not, would still be subject to increased war risk premiums as they are traversing an active combat zone.

Asked whether ships circumventing around the Cape of Good Hope could be an answer to the current crisis, Pike said that there were several issues with this.

“For a ship to transit around the Cape, it’s an extra 10 to 15 days,” Pike explained. “That has a macro impact on the world’s shipping fleet.”

“The longer a ship takes to complete a voyage, the fewer ships you’ve got available to do these voyages. The fleet capacity contracts by 10% to 15%.”

Ships travelling around the Cape of Good Hope use much more fuel than those travelling through the Strait of Hormuz or the Suez Canal, which would drive up operating expenses.

Pike explained that this would have to be recovered through higher freight rates and other logistics costs, which could lead to the prices of goods going up as well.