Christopher Nolan’s latest blockbuster, The Odyssey, has had viewers draw lessons from the nearly 3,000-year-old epic poem for today’s economic and geopolitical realities. Judging by the takes that are emerging, it’s not a stretch either.
Odysseus embarks on a 10-year journey back to his kingdom of Ithaca after the Trojan War. During his journey back home, he braves the treacherous elements of the sea, characterised in the film and epic as the wrath of the Greek god of water, Poseidon.
The global energy market seems to be on its own epic, dangerous and downright horrifying journey to some semblance of normality.
The latest South African fuel price announcement on Monday sees 0.005% sulphur diesel rising 123.44c a liter, while 0.05% sulphur diesel is set to increase 138.44c/litre.
This is despite both 93 and 95 unleaded petrol seeing a 52c/ litre decrease. There is little reason for optimism that runaway costs will be adequately contained, especially for diesel.
The leading culprit, of course, is war. But there is ample reason to believe that severe weather conditions at key refineries around the world could further compound the price pressures for oil and refined products, making a less-than-ideal inflationary situation even more untenable.
Author Natalie Haynes wrote in her historical fiction book A Thousand Ships that “in any war, the victors may be destroyed as completely as the vanquished.”
Few current events are illustrating this more sharply than the many geopolitical standoffs taking place across the map.
At the weekend, The Guardian reported that Ukrainian president Volodymyr Zelensky announced a successful drone strike on critical energy infrastructure in the Russian republic of Bashkortostan — three refineries.
Central banks have sung a chorus to the key of a cautious hold on rates, given the rising costs that consumers and businesses are battling with. But when weather and war besiege the market, the journey to the promised land becomes even longer and even more dangerous.
The refineries process millions of tons of oil annually. In complete isolation, this appears to be just another episode in the four-year war between Russia and Ukraine, which began when Russian President Vladimir Putin invaded Ukraine in 2022.
But when assessed with other challenges facing oil supply and other risks to infrastructure, perhaps war and inclement weather conditions being the most severe of the lot, it paints a worrying picture of a dire new normal for energy security at a global level.
Bloomberg reported towards the end of July that US refineries are being pushed to secure record-breaking profit levels to the point where the risk of equipment breakdowns is being heightened, with refiners across the largest economy on earth running at around a 95% utilisation rate.
The risk of hurricanes hitting the Gulf Coast refineries is apparent, since the hurricane season runs through to the end of November, according to the US National Oceanic and Atmospheric Administration.
Bashkortostan’s cluster of refineries in Ufa connects to nodes that transport refined fuel products to the west, central European regions of Russia, Serbia and deeper eastern markets, according to the Kyiv Independent.
Refineries on the Gulf Coast send refined products to Mexico, other parts of South America, as well as the East Coast and Midwest of the US. According to RBN Energy, they process about 8.9-million barrels of crude oil into diesel, gasoline, and jet fuel daily.
If it is worrying that the Strait of Hormuz has not been mentioned yet, that is for good reason. According to EnergyNow.com, as recently as Thursday, the strait remained vulnerable to disruptions, with Aramco CEO Amin Nasser calling it “catastrophic” for the world’s oil markets.
Closer to home, South Africa went from having six refineries, of which four processed imported crude, to having two operational and just 20% of South Africa’s refining capacity. The Sapref refinery in KwaZulu-Natal closed in 2022 due to a combination of flooding events and ongoing protest-driven looting and violence, among other things.
Asia has been hardest hit by fuel supply pressures due to the sheer size of the market in the region, but the rest of the world has no reason to disabuse itself of the notion that it can emerge unscathed from the fracas.
Central banks have sung a chorus to the key of a cautious hold on rates, given the rising costs that consumers and businesses are battling with. But when weather and war besiege the markets, the journey to the promised land becomes even longer and even more dangerous.
Any chance that leaders, oil producers and policymakers had to soften the blow of these shocks might have been 10 years too late, and there is no sign of home on the horizon just yet.
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