Page 120 - SARB: 100-Year Journey

The oil crisis of 1979
Iran’s oil sanctions against South Africa made international headlines. The New York Times (1979) covered the story and the nuances of the country’s domestic disparities. At the time, Iranian oil exports had accounted for 90% of South Africa’s overall supply.
“For blacks, accounting for more than 70 percent of the population but less than 10 percent of ... vehicles, the direct impact has been limited. But indirectly they have been affected as badly as the whites, possibly more so, since their scant wages must stretch to cover higher bus and rail fares, as well as the higher basic food costs brought about by double digit inflation spurred by the oil- price increases.” (New York Times, 1979).
The New York Times article (1979) also highlighted the high levels of unemployment among black youth, a situation that prevails in 2021. That was despite the SARB’s Annual Economic Report of 1969 recording “almost full employment” in the South African economy.
The 1970s were also important for the South African economy because this was the time when the sterling area became defunct and the Bretton Woods system imploded. The latter was the outcome of pronouncements by the International Monetary Fund (IMF) and the US Treasury.
The oil crisis
In the early 1970s, a diplomatic row erupted between the US and the Organization of Arab Petroleum Exporting Countries (OAPEC). This led to the latter introducing an oil embargo against the US. Soon, oil production cuts ensued, followed by price spikes. Between 1973 and 1974, the oil price moved from US$3/barrel to US$12/barrel. Iran, a major exporter of oil to South Africa, was a member of OAPEC. The embargo had significant implications for South Africa’s domestic fuel supply.
When the embargo was lifted in 1974, the oil price continued to trend upwards. In 1975, the oil price reached a high of more than US$13/barrel.
As petrol filling stations dried up, South Africa rationed its dwindling supply by placing limits on fuel consumption. South African motorists were prohibited from filling their vehicles between 6pm and 6am, and the freeway speed limit was reduced from 120km/h to 80km/h.
There were signs of trouble, too, in the primary and secondary sectors of the economy. Although non-gold mining output and manufacturing activity had increased, gold production had decreased. Imports, which notably included weapons procured for the army’s war in Angola but were reported under government consumption expenditure, rose significantly between 1973 and 1975.
In 1979, Iran officially closed the taps on fuel supply to South Africa, citing the country’s draconian policies towards the majority of the population.
An abandoned petrol station, a victim of the economic crisis, with a ‘no fuel’ sign covering the pumps. /Shutterstock
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