South Africa's exceptional dependence on imported oil has been exposed by recent events in the Middle East and the closure of the Strait of Hormuz. This reliance leaves the country vulnerable to price fluctuations and supply disruptions. According to BloombergNEF's South Africa Transition Factbook 2026, the country's transition to clean energy can counteract this dependence. The ongoing conflict between the US and Iran has disrupted the global oil supply, causing prices to skyrocket.
On September 14, the price of Brent crude oil stood at $105.63, higher than the $67.63 from the previous year. In South Africa, petrol prices in August were between 19% and 28% higher than a year ago, while diesel prices have increased even more. BloombergNEF notes that South Africa stands out due to its dependence on imported oil products, with imports significantly exceeding exports, resulting in a negative trade balance equivalent to nearly 5% of the country's GDP.
Other African countries with similar high levels of dependence on imported oil include Nigeria, Morocco, and Ghana. The South African Reserve Bank recently stated that the country's refining capacity has decreased by half over the past decade, and imported refined products now meet more than half of the domestic fuel demand. This increases the country's exposure to global price shocks and supply disruptions.
The Reserve Bank noted that this dependence also increases South Africa's vulnerability to exchange rate fluctuations. The government is attempting to manage this through various measures, including subsidizing retail fuel prices, increasing strategic reserves, and planning to rebuild refining capacity in Durban through its Central Energy Fund. However, the current crisis may accelerate the growing demand for clean technology.
According to the BloombergNEF report, the current crisis can shift imports of oil products to low-carbon technologies such as solar power, wind, batteries, and electric vehicles. South Africa's transition to a greener and more competitive energy market will reduce its dependence on imported fossil fuels in the long term. The report states that fossil fuel imports accounted for around 4.5% of South Africa's GDP in 2024 and are expected to decline to 4.3% by 2030.
By 2040, fossil fuel imports are expected to decrease to 2.8%, and by 2050, to 1.6%. This assumes no further policy support for the energy transition beyond existing measures and is largely driven by a decrease in oil product imports and internal combustion engine vehicles. With an extraordinary effort to reach net zero by 2050 in the electricity, transportation, industry, and building sectors, BloombergNEF states that fossil fuel imports can decline faster.
The BloombergNEF report highlights that South Africa is already the largest importer of clean energy products in sub-Saharan Africa. The demand for solar power in South Africa and the rest of sub-Saharan Africa has increased due to the closure of the Strait of Hormuz, which has raised concerns about rising costs and energy security. The report also notes that investment in renewable energy decreased by 41% from $8.6 billion in 2024.
Key points
- South Africa's reliance on imported oil has left it vulnerable to price fluctuations and supply disruptions.
- The country's transition to clean energy can counteract its dependence on imported oil.
- Investment in renewable energy decreased by 41% from $8.6 billion in 2024.
