Briton Scott Jamieson, who also recorded a 64, was one behind on 11-under 133 alongside overnight leader Thongchai Jaidee of Thailand (68).
Six shots adrift in a share of fourth place on 139 were British pair Paul Lawrie (70) and Danny Willett (70), Frenchman Julien Quesne (67), Ireland's Shane Lowry (69), Dane Thomas Bjorn (70) and Jeev Milkha Singh of India (70).
Oosthuizen, the 2010 Open champion, got his round going by holing a 15-foot putt for birdie at the third.
The South African picked up another shot at the fourth before he rattled off three consecutive birdies from the seventh to go out in 31.
The 30-year-old Oosthuizen then missed a short birdie chance at the 16th before sinking birdie putts of 45 and 25 feet at the 17th and 18th.
"Today was much better in terms of ball-striking," he said. "I hit the ball really well and I putted beautifully.
"I missed a few short ones when I didn't have the right line but I generally seemed to have the speed of the greens and so I was able to make longer putts than usual. It's always nice when you know the putter is working."
Oosthuizen said he took a pragmatic approach to his eight-under round at the Durban Country Club.
"My main goal was to hit as many greens as I could," he explained. "A lot of times I didn't even go close to the pins - I just decided to hit the centre of the greens and it worked.
"You get those days when the putts won't go in and you shoot one or two-under but today the putts went in."
The second round offered something a little different, the professionals competing in a pro-am alongside the main event.
Oosthuizen and playing partner Thongchai were victorious and the sponsors agreed to exchange the South African's prize of a car for the mechanical digger he has coveted for the last two years.
"I'm walking away with a nice gift for my farm. It's going to be a lot of fun to be playing around with it," said Oosthuizen.
Jamieson, who clinched his maiden European Tour victory in Durban at the Nelson Mandela Championship last month, propelled himself into contention with five birdies on the front nine.
Ernie Els, Nicolas Colsaerts and Francesco Molinari were eight strokes off the lead while Padraig Harrington was a further shot adrift on 141.
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