South Africa considers buying Russian oil to tackle energy inflation - a move that could boost Moscow's coffers

• South Africa is thinking about importing oil from Russia to tackle soaring energy inflation.
• Fuel prices in South Africa are 29.2% higher in April than a year ago.

South Africa said it's thinking about importing oil from Russia to help tackle soaring energy inflation.

"We should consider importing crude oil from Russia at a low price because it is not sanctioned," said South African Mineral Resources and Energy Minister Gwede Mantashe at a parliamentary de abate, Reuters reported on Wednesday.

Although purchases of Russian energy products undermine sweeping sanctions against the country over the war in Ukraine, they are not in violation of US or European Union sanctions. That's because these trade restrictions do not forbid buyers outside US and EU jurisdictions to buy Russian oil — which is now priced at record discounts against other grades, per Reuters.

US Energy Secretary Jennifer Granholm said last month that secondary sanctions against countries buying Russian oil aren't off the table, but the Biden administration is being careful about the impact of such restrictions on the market, Reuters reported. Oil prices are trading at 13-year highs and contributing to red-hot consumer inflation.

Like many countries around the world, South Africa is battling soaring inflation, with consumer prices increasing 5.9% in April over a year ago, according to its official statistics department. Fuel prices "continued to cause pain in April 2022" and was 29.2% higher than a year ago, according to Statistics South Africa.

The oil price has jumped by over 60% so far this year, driven in part by an anticipated shortfall, firstly of Russian supply, but also by production capacity constraints in major exporters, as demand booms.

South Africa imports about 60% of its fuel needs, according to Bloomberg. It imports its oil primarily from OPEC countries including Nigeria and Saudi Arabia.

Russia has typically been one of the world's largest exporters of crude oil and the third-largest producer, after the United States and Saudi Arabia. But its war against Ukraine has cost it some of its most valuable customers, including the European Union, which will phase out Russian fuel imports this year. As a result, its oil is travelling further to reach new buyers in China and India, for example.

South Africa, which has historical ties with Moscow dating back to the Soviet-era, abstained from a United Nations vote in March condemning Russia's invasion of Ukraine. Last month, South African President Cyril Ramaphosa said "bystander countries" were impacted badly by sanctions against Russia over the war, Reuters reported.

Any purchase of Russian oil will boost Moscow's coffers. Despite sweeping sanctions, Russia has been raking in energy revenues as energy prices soar. In May, the country's revenues from oil exports jumped 11% from April — taking the earnings back to pre-war levels, the International Energy Agency said on Wednesday.

South Africa's mineral resources and energy ministry did not immediately respond to Insider's request for comment that was sent outside regular business hours.