Petrol price pain coming for South Africa

One often overlooked impact of the United States’ recently imposed tariffs on around 90 countries is their effect on fuel supply chains.

South Africa is particularly vulnerable to disruptions in the global fuel trade, with delays, shortages, and price instability set to significantly impact industries like mining, manufacturing, and agriculture.

This is feedback from Essential Fuels General Manager Paul Kruger, who recently outlined the impact United States tariffs could have on global fuel trade.

“As a net importer of fuel, South Africa stands particularly exposed to rising global energy costs, and the effects could cascade through every sector of the economy,” Kruger said. 

“South Africa imports nearly 70% of its refined fuel, making it heavily reliant on international supply chains.”

Therefore, when the United States, one of the most prominent players in the global oil trade, introduces tariffs on fuel exports or related goods, Kruger said it does not just affect bilateral trade.

When United States tariffs are in place, the global pricing mechanisms for oil and, therefore, fuel respond. 

“Prices go up. Supply tightens. And for import-dependent nations like South Africa, the consequences are immediate: higher import costs, increased retail prices, and shrinking profit margins for fuel suppliers,” he warned.

Kruger explained that trade barriers affect more than just the endpoint of a sale, as they ripple backwards through production, procurement, and transportation. 

This means suppliers could be stuck with excessive stock because manufacturers will not be able to incorporate these inputs into finished goods destined for the United States. 

“That means less demand for industrial fuel, resulting in a shrinking market across the board,” he said.

“From energy producers to logistics firms, the effects cascade. Storage tanks that should be rotating stock are sitting full. Fuel distributors that relied on a predictable cadence of refuelling and resupply are now managing stagnation.” 

“Delays, shortages, and price instability are on the horizon, especially in industries like mining, manufacturing, and agriculture that rely heavily on industrial fuel to operate efficiently.”

Kruger pointed out that this threat exposes a systemic vulnerability in South Africa’s approach to trade. For years, the government has failed to develop resilient trade policies or nurture alternatives to the US market.

Government inaction

Kruger argued that, over the past few years, South Africa has not done enough to modernise its trade relationships or simplify its tariff structure. 

He said the government’s hesitation in this regard is partly economically motivated, as lowering tariffs reduces tax revenue. 

“With a narrow tax base, the state is reluctant to relinquish any income source,” he said.

“But the cost of inaction is now painfully clear. As we face reduced industrial demand, business uncertainty, and declining fuel consumption, the wider economy will inevitably feel the crunch.”

“Even conservative estimates suggest a 0.2% economic contraction, but that number doesn’t reflect the depth of the downstream impact – lost jobs, stalled investments, and diminished competitiveness.”

Accounting firm EY recently warned that South Africa could see job losses of around 100,000 due to the United States tariffs placed on the country’s exports. These job losses will primarily affect the agriculture and automotive industries.

Economists have estimated that the US tariffs will result in South Africa’s economic growth taking a 0.3% hit. While this may not sound significant, the country’s economy is only projected to grow by around 1% in 2025.

Kruger said diversification must move from theory to execution to remedy this situation and protect South Africa’s fuel industry from the blowback of United States tariffs. 

Firstly, he recommended that South Africa redirect fuel exports and inputs toward alternative markets where demand is strong and trade barriers are fewer. 

For example, he said regional partners across Africa and energy-hungry economies in Asia offer opportunities that have long been underutilised. 

In addition, strengthening ties with BRICS+ nations, many of which already share common trade and development goals with South Africa, could provide access to less volatile markets and more predictable trade flows.

However, Kruger cautioned that trade diversification should not only focus on geographical diversification, but also consider the function of trade policy. 

For example, by investing in downstream infrastructure, including storage capacity, refining capabilities, and intermodal transport systems, the fuel industry can build buffers into the supply chain that reduce its sensitivity to sudden external shocks.

“Policy coordination is equally critical. Shielding the fuel sector requires urgent alignment between government, industry, and logistics networks,” he said. 

“The state must simplify customs procedures, fast-track permits for non-US trade routes, and ease tariff bottlenecks for imports essential to fuel operations.”

Kruger further urged industry players to take matters into their own hands and accelerate the digitalisation of their supply chain management, enabling real-time visibility of stock levels and shipping patterns to avoid costly stagnation or overstock. 

He added that strategic reserves and flexible contracts with alternative suppliers can also serve as stopgaps during disruptions.

“The private sector has long been calling for a proactive, forward-looking trade strategy,” Kruger said.

“Now that reactive policies have left industries vulnerable, we hope government and business leaders alike will re-examine the structures that got us here and start building something more resilient, more diverse, and more future-facing.”