Global oil price surge rattles markets amid Middle East tensions

The surge in global oil prices is rattling financial markets as escalating tensions across the Middle East raise concerns about the impact on both the global and domestic economy.

The price of oil has breached the $100 per barrel mark, a 20% increase in a week.

Economists said the sharp price spike reflects fears that disruptions in oil supplies, particularly through the Strait of Hormuz, which handles a significant amount of global oil trade, may raise new economic pressures.

These developments come as Statistics South Africa is set to release the fourth-quarter economic performance readings tomorrow.

Just over a week ago, the price of Brent crude oil was below $80 per barrel, but in midday trade today, it was around $104 per barrel.

Markets remain in the red amid jitters over the conflict between Iran, Israel, and the US and the naming of the new Supreme Leader in Iran.

Economists argue that a prolonged war is likely to push up inflation, particularly fuel costs.

This means consumers may have to pay more for petrol and diesel in April, a price hike that tends to have a knock-on effect on other goods and services.

The South African Reserve Bank said it will now rework its economic forecasts before its next interest rate decision in two weeks. The central bank kept interest rates unchanged at its last meeting in January.

The local economy is expected to have grown by at least 0.5% in the last three months of 2024.

However, going forward, the National Treasury’s projection of 1.6% for this year might be at risk.