Chatting to AA CEO Ramagwede about the Middle East conflict’s effect on global fuel prices

We are on the cusp of the biggest ever jump in the price of fuel, doubling the previous record. Where is the conflict heading in terms of fuel prices and where is SA in terms of fuel reserves?If the conflict in the Middle East is short-lived, then we should see a minor impact on fuel prices. Put differently, we could still see an increase, but the scale and duration thereof should be short as global oil prices stabilise and return to pre-conflict levels.

If the conflict continues, and the longer it persists, the worse its impact on our fuel prices will be.The big question regarding the impact on our fuel prices is the amount of fuel (refined oil) we have in reserve. You will recall that South Africa sold its strategic oil reserves in 2016 when it was estimated that we had between eight and 12 months of fuel in reserve. In a recent radio interview, I was joined on the call by the deputy director-general of Mineral Resources and Energy.

He said on air that South Africa had bought back our reserves, but he couldn’t be drawn on exactly what the state of our reserves is. If we have several months of reserves, the government can tap into these ahead of buying oil at current higher prices. This will definitely minimise the blended purchase price and by implication the blow to consumers and keep fuel prices lower.