How to Buy Oil Shares and Commodities in South Africa

Oil and commodities have been the talk of the markets for years. Whether it’s surging crude prices making headlines or gold hitting all-time highs, South African investors often wonder how they can get a piece of the action. The good news is you don’t need to be a Wall Street trader or have millions of rand to invest in oil and commodities. Here’s your complete guide to accessing these markets from South Africa.

Disclaimer: I am not a financial advisor. This information is for educational purposes only and should not be considered as financial advice. Always do your own research and consider seeking advice from a qualified financial professional before making any investment decisions.

Why Invest in Oil and Commodities?

Commodities offer something most traditional asset classes don’t: a hedge against inflation. When the price of goods rises, commodity prices tend to rise too. They also provide portfolio diversification because commodity returns often don’t move in lockstep with shares and bonds.

Key reasons South Africans consider commodity investing:

Inflation protection – commodity prices typically rise when inflation picks up
Portfolio diversification – low correlation with traditional equity and bond markets
Exposure to global demand trends – emerging market growth drives commodity demand
South Africa’s resource-rich economy makes commodity exposure a natural fit

But commodities are also notoriously volatile. Oil can swing 20-30% in a matter of weeks. This isn’t an asset class for the faint-hearted, and it should never form the core of your portfolio. Think of it as a seasoning, not the main course.

Understanding Your Options

South African investors have several pathways to gain exposure to oil and commodities. Each comes with its own trade-offs between simplicity, cost, and directness of exposure. Let’s break them down.

1. JSE-Listed Oil and Resource Companies

The simplest way to get oil exposure on the JSE is buying shares in companies whose business is directly tied to oil. The most obvious candidate is Sasol (JSE: SOL), South Africa’s largest integrated energy and chemical company.

Key JSE-listed resource companies:

Sasol (SOL) – Integrated oil and gas company with operations in South Africa and Mozambique. Share price is highly correlated with crude oil prices and the rand/dollar exchange rate.
Exxaro Resources (EXX) – Primarily a coal miner but with growing energy interests. More of an indirect energy play.
Glencore (GLN) – Global commodity trading and mining giant dual-listed on the JSE. Broad commodity exposure across oil, coal, metals, and agriculture.
Anglo American (AGL) – Diversified mining house with exposure to commodity cycles, though less oil-specific.

Pros: Simple to buy through any JSE broker. You own shares in real businesses with revenues, profits, and dividends. Familiar regulatory environment.

Cons: Company-specific risk means Sasol’s share price can fall even when oil rises (e.g., operational issues, debt concerns, or rand strength). You’re investing in a company, not the commodity itself.

2. Commodity ETFs on the JSE

If you want broader commodity exposure rather than betting on a single company, commodity ETFs are your next port of call. These funds track baskets of resource companies or commodity indices.

Notable commodity-related ETFs:

Satrix Resi ETF (STXRES) – Tracks the FTSE/JSE Capped Resources 10 Index. Concentrated exposure to the 10 largest JSE resource companies, including oil, mining, and energy players. This is the most direct JSE-listed commodity ETF available.
Satrix SWIX Top 40 ETF (STX40) – While not a commodity ETF per se, the Top 40 is heavily weighted toward resource stocks (often 30-40% of the index), giving you indirect commodity exposure.
ABSA NewGold ETF (NGDLD) – Tracks the rand price of gold. A pure commodity play if gold is your focus.
ABSA NewPlat ETF (PLTLD) – Tracks the rand price of platinum. Another pure commodity play specific to platinum group metals.

Pros: Instant diversification across multiple companies or commodities. Low minimum investment (the price of a single ETF unit). Regulated by the FSCA. Can be held in a TFSA.

Cons: Resource ETFs on the JSE are equity-based (they hold mining/oil company shares, not physical commodities). This means company fundamentals and market sentiment affect returns, not just commodity prices. Pure commodity price ETFs (like NewGold) only cover precious metals – there’s no JSE-listed ETF that directly tracks the oil price.

3. Commodity ETNs on the JSE

This is where things get interesting for oil investors. Exchange Traded Notes (ETNs) are debt instruments issued by banks that track the performance of an underlying index or asset. Unlike ETFs, ETNs don’t hold the underlying assets – they’re a promise by the issuer to pay returns linked to the commodity’s price.

Relevant commodity ETNs:

ABSA Crude Oil ETN – Tracks the Brent crude oil price in rand. This is currently the most direct way for a South African retail investor to get exposure to the oil price itself, without buying shares in an oil company.
Other ABSA commodity ETNs – The ABSA ETN range also includes products tracking commodities like silver, copper, and other metals.

Pros: Direct exposure to the commodity price (not a company). Buy and sell like any share on the JSE. Low entry point. Available on most trading platforms.

Cons: Issuer risk – if the issuing bank (ABSA) defaults, you could lose your investment. ETNs don’t pay dividends. The rand/dollar exchange rate significantly affects returns (a stronger rand reduces your return even if the oil price rises). Not ideal for long-term holding due to the debt instrument structure.

4. International ETFs via Offshore Platforms

For the most direct and diversified commodity exposure, some South Africans turn to international brokers that provide access to global commodity ETFs. These include funds that hold physical commodities or futures contracts.

Popular global commodity ETFs:

United States Oil Fund (USO) – Tracks the price of West Texas Intermediate (WTI) crude oil through futures contracts. US-listed.
Invesco DB Commodity Index Tracking Fund (DBC) – Broad commodity exposure across energy, agriculture, and metals. US-listed.
iShares S&P GSCI Commodity Indexed Trust (GSG) – Tracks a broad basket of commodities with heavy energy weighting. US-listed.

How South Africans access these: Platforms like EasyEquities offer US market access with fractional shares. Interactive Brokers and Standard Bank Webtrader also provide access to international markets. You’ll need to complete the necessary FICA documentation and understand your foreign investment allowance (R1 million single discretionary allowance + R10 million foreign investment allowance with SARS approval).

Pros: Widest range of commodity products. Direct oil price exposure through futures-based ETFs. Highly liquid markets. Professional-grade tools and research.

Cons: Currency risk (rand/dollar fluctuations). Foreign tax implications. Higher minimums on some platforms. Regulatory complexity around foreign allowances. Futures-based ETFs suffer from “contango” – the cost of rolling futures contracts forward erodes returns over time.

5. Unit Trusts and Managed Funds

If you’d rather have a professional manage your commodity allocation, several South African unit trusts focus on resources and commodities. These are available through platforms like STANLIB, Allan Gray, and Old Mutual.

Examples:

Resources-focused unit trusts that invest in JSE-listed mining and energy companies
Multi-asset funds with strategic commodity allocations
Offshore feeder funds that provide international commodity exposure

Pros: Professional management. Suitable for investors uncomfortable with direct stock/ETF selection. Available through most retirement and savings products.

Cons: Higher fees (typically 1-2% annually plus performance fees). Less control over specific holdings. Minimum investment amounts often higher than ETFs.

The Currency Factor: Your Hidden Risk

Here’s something many South African investors overlook: almost all commodities are priced in US dollars. This means the rand/dollar exchange rate has a massive impact on your returns.

Two scenarios to illustrate:

Oil rises 10% in dollar terms, but the rand strengthens 10% against the dollar. Your rand return is roughly 0% – the currency gain wiped out the oil gain.
Oil stays flat in dollar terms, but the rand weakens 15% against the dollar. Your rand return is roughly +15% – you profited purely from currency depreciation.

This double-edged sword means South Africans effectively get leveraged commodity exposure. When the rand weakens (as it has historically trended), commodity returns are amplified. But a period of rand strength can make commodity investments look lacklustre even when global commodity prices are rising.

Where to Buy: Platform Comparison

Here’s a quick comparison of the most popular platforms South Africans use for commodity investing:

EasyEquities – Lowest fees. Access to JSE shares, ETFs, ETNs, and US markets. Fractional shares. Great for beginners. No monthly fees.
SatrixNOW – Zero platform fees on Satrix products. Simple interface. Limited to Satrix ETFs only (no ETNs or individual shares).
Standard Bank Online Share Trading – Full-service offering. Access to JSE and international markets. Higher fees but more research tools.
FNB Share Investing – Convenient if you bank with FNB. JSE shares and ETFs. Moderate fees.
Interactive Brokers – Best for serious international market access. Lowest global trading fees. Complex platform. Best for experienced investors.

Tax Implications You Should Know

Commodity investments have specific tax considerations in South Africa:

Capital Gains Tax (CGT) – Profits from selling shares, ETFs, and ETNs are subject to CGT. The inclusion rate is 40% for individuals, meaning 40% of your gain is added to your taxable income.
Dividends Tax – Dividends from JSE-listed companies (like Sasol) are subject to 20% dividends tax, usually withheld at source. ETF and ETN distributions may be taxed differently depending on their structure.
Foreign investments – Offshore commodity ETFs are still subject to CGT and may trigger additional reporting requirements. If your total offshore investments exceed a threshold, you may need to declare them to SARS.
TFSA benefits – JSE-listed commodity ETFs and ETNs can be held in a Tax-Free Savings Account, sheltering all growth from CGT and dividends tax. This is a compelling option for long-term commodity exposure.

Recommended Approach for Different Investor Types

Beginner investors: Start with the Satrix Resi ETF on EasyEquities or SatrixNOW. It gives you broad resource exposure in a simple, regulated product with low fees. Consider holding it in a TFSA.

Intermediate investors: Combine the Satrix Resi ETF with the ABSA Crude Oil ETN for more direct oil price exposure. Add NewGold or NewPlat ETFs for precious metals diversification. Keep total commodity exposure to 10-15% of your portfolio.

Advanced investors: Use international platforms to access US-listed commodity ETFs for the widest range of options. Consider a barbell approach: core commodity exposure through JSE-listed ETFs/ETNs, plus satellite positions in specific global commodity funds. Manage currency risk consciously.

Risk Management and Safety Considerations

Commodities are not buy-and-forget investments. They require active monitoring and clear risk parameters.

Key risks to manage:

Volatility – Oil can move 5-10% in a single day. Only invest money you can afford to see swing wildly.
Contango – Futures-based ETFs lose money over time as they roll contracts forward. This makes them poor long-term holds unless commodity prices are rising faster than the roll cost.
Issuer risk – ETNs are unsecured debt. If the issuing bank fails, ETN holders are unsecured creditors.
Currency risk – The rand can move against you. A strengthening rand reduces your commodity returns.
Geopolitical risk – Oil prices are heavily influenced by OPEC decisions, wars, and sanctions. These events are unpredictable.

Safety rules:

Limit total commodity exposure to 10-15% of your investment portfolio
Never invest emergency fund money in commodities
Use ETFs and ETNs rather than single-stock commodity bets unless you have deep knowledge of the company
Monitor positions at least monthly – commodity markets can shift quickly
Consider rebalancing quarterly to maintain your target allocation

Step-by-Step: Buying Your First Oil/Commodity Investment

Ready to get started? Here’s your action plan:

Choose your platform – Open an account on EasyEquities (simplest for beginners) or your preferred broker.
Fund your account – Transfer rand into your trading account. Consider also funding a TFSA account for tax benefits.
Decide on your approach – For most investors, start with the Satrix Resi ETF (broad resources) or the ABSA Crude Oil ETN (direct oil price).
Place your order – Search for the ETF/ETN name or JSE code. Enter the amount you want to invest. With fractional shares on EasyEquities, you can start with as little as R50.
Set up recurring investments – Dollar-cost average into your commodity position by setting up a monthly debit order. This smooths out the volatility.
Monitor and rebalance – Check your position quarterly. If commodity exposure exceeds your target allocation, trim back. If it’s fallen below, consider adding more.

Conclusion

Investing in oil and commodities from South Africa is more accessible than ever. Whether you choose the simplicity of JSE-listed resource ETFs, the direct exposure of commodity ETNs, or the breadth of international commodity funds, there’s an option to match your experience level and risk tolerance.

But remember the golden rule: commodities are a supplement to your portfolio, not the main event. Keep your core diversified across equities, bonds, and cash, and use a measured commodity allocation (5-15%) to add diversification and inflation protection.

Your action step: Open an EasyEquities account this week and buy your first R500 of the Satrix Resi ETF. It’s the simplest first step into commodity investing, and you’ll learn more by doing than by reading. Just start small, stay diversified, and keep your commodity exposure within sensible limits.