GEORGE NEWS - The escalating conflict involving Iran has sent shock waves through global energy markets, with oil prices spiking amid fears of supply disruptions. Brent crude briefly surged above $100 per barrel and at one stage approached $120 as tensions intensified in the Middle East. Prices later eased, settling at about $91 per barrel on 10 March.
A key concern for global markets is the Strait of Hormuz, a narrow waterway between Iran and Oman through which roughly one fifth of the world’s oil supply passes.
Any disruption to shipping through the strait could rapidly drive oil prices higher and destabilise international energy markets.
Energy analysts say the direction of prices will depend largely on how long tensions persist and whether oil shipments are affected. If supply routes remain open, prices may stabilise below $100 per barrel. However, a prolonged disruption could quickly push prices back into triple-digit territory.
For South Africa, the situation carries significant implications. The country relies heavily on imported fuel, with more than 60% of its fuel demand now supplied from international markets following the closure or reduced output of several local refineries. This means local fuel prices are closely linked to global oil prices and movements in the rand.
Petrol and diesel prices are calculated using the Basic Fuel Price, which reflects the cost of importing fuel, as well as freight, insurance and other associated expenses. When international oil prices increase, those costs are typically passed on to consumers during the next monthly fuel price adjustment.
Denver Botha fills a vehicle at the BP garage in Parkdene. Photo: Marguerite van Ginkel
Early estimates suggest motorists could face noticeable increases if current trends continue. Petrol could rise by more than R2 per litre, while diesel prices may climb even more sharply due to larger cost pressures in international markets.
Recent fuel price calculations already show a widening gap between current pump prices and underlying international costs. If these conditions persist for the rest of the pricing cycle, petrol could increase by around R3 per litre or more, while diesel prices may rise by about R5 per litre.
At present, 95 Unleaded petrol costs about R19.47 per litre at the coast and roughly R20.30 inland, while 93 Unleaded sells for about R20.19 per litre. Wholesale diesel prices are about R17.84 per litre at coastal locations and approximately R19.17 inland.
Econometrix chief economist Azar Jammine has warned that if Brent crude remains above $100 per barrel for a prolonged period, petrol prices in South Africa could rise to around R26 per litre.
However, the impact is not always immediate. A stronger rand or stable supply routes can soften the effect of global price spikes. South Africa also imports fuel from a range of suppliers, including West African producers, which helps diversify supply chains.
If tensions escalate and key shipping routes come under pressure, South Africans could face higher fuel costs and rising transport and food prices in the months ahead.
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