In response to diesel shortages triggered by Middle East conflicts including recent attacks on Iran, South Africa's Department of Mineral Resources and Petroleum has begun a comprehensive review of the fuel pricing mechanism. Reforms to industry margins are targeted for March 2027, with a temporary R3 per litre fuel levy cut providing short-term relief amid rising global oil prices.
The shortages, particularly severe in the Western Cape's Overberg region—where a Caledon resident lamented 'Daar’s niks diesel in die Overberg nie'—saw supplier OVK suspend orders on 9 March 2026 due to surging demand, followed by a price increase from midnight 17 March as subsidies ran dry.
Diesel prices, unlike regulated petrol, follow an import parity model: 89% tied to international benchmarks like surging Brent crude, plus freight, levies over R6.35/litre, and retailer-set margins that enable rapid hikes critics call 'unethical price gouging' (though legal). South Africa imports most diesel after halving refining capacity, with it powering over 50% of liquid fuels and vital trucking amid Transnet woes.
To safeguard food security, the government enacted a temporary R3/litre reduction in the general fuel levy. Robert Maake, director of the fuel pricing mechanism, noted the formula accounts for import costs, local factors, Middle East tensions, and a weaker rand. The ongoing review, with a contracted service provider, focuses on wholesale, retail, storage, and distribution margins, aiming for completion by March 2027.
