Double disaster for South Africa
Global oil prices hit over $110 a barrel for the first time since 2022, drawing fears of another global inflation crisis echoing the fallout of Russia’s invasion of Ukraine.
Coupled with the sharp rise in oil prices, the rand has weakened significantly, marching back towards R17/$ amid a wider emerging market selloff.
Brent crude futures settled at above $114 on Monday, 9 March 2026, after trading as high as $119. Prices had already pushed above $110 on Sunday, 8 March.
By mid-morning trade (South African time), prices had eased slightly to around $107 a barrel, but markets remain volatile, with some steep fluctuations.
The price jumps reflect market panic and pricing in a disruption around the Strait of Hormuz as a result of the United States/Israel war in Iran.
The US and Israel bombed Iran on 28 February 2026, killing its Supreme Leader and many high-ups.
In the week since the attack, Iran has retaliated by striking US operations in its neighbouring countries, leading to further attacks on the nation.
In the latest development, Iran has named Mojtaba Khamenei, the son of the late Iranian supreme leader Ali Khamenei, killed by the US attacks, as its new Supreme Leader.
The escalation of the war in the Middle East places the Strait of Hormuz into focus.
The strait is one of the world’s most crucial energy chokepoints, where an average of about 20 million barrels per day is shipped through.
This is roughly 20% of global petroleum liquids consumption, according to the US Energy Information Administration (EIA).
While some economists and analysts believe the oil price surge will be short-lived, others warn that prices could hit $150 a barrel, with the Strait of Hormuz a decisive factor.
According to the EBC Financial Group, for oil prices to reach $150, it would require conditions harsher than those the market has currently confirmed.
This would include a prolonged, effective blockage of Hormuz flows and meaningful production outages across multiple Gulf producers.
Goldman Sachs predicts that oil prices could reach $150 if disruptions persist and supply flows remain significantly restricted.
However, even if prices do not reach $150, at $110, South Africans will still suffer.
Petrol, inflation and interest rates
Oil prices rising above $110 matter to South Africa because higher global crude prices will feed into local fuel costs, transport expenses, and inflation.
“For households, that can mean more pressure on daily living costs. For markets, it matters because a weaker rand can make imported oil even more expensive, increasing the risk that global energy shocks turn into domestic inflation pressure,” EBC said.
The first and hardest point of impact for South Africa will be in fuel prices, where recoveries are pushing deeper into the red every day.
The latest data from the Central Energy Fund (CEF) shows that petrol price recoveries have deepened further into under-recovery, now sitting between R2.60 and R2.80 per litre.
For diesel—the most common fuel type used by industry—these under-recoveries are sitting at alarming levels, around R5.00 a litre.
Those who rely on illuminating paraffin are facing an under-recovery of R7.00 per litre.
While there are still three weeks ahead for stability to return to markets, indications are that things will not settle any time soon.
A massive hike to fuel prices will deliver a crushing blow to motorists and to businesses and entire industries—the latter of which will likely filter through to higher prices for goods and services.
This, in turn, will push inflation higher, which will spark alarm with the Reserve Bank’s Monetary Policy Committee (MPC) and impact interest rate cuts.
The likely 25-basis-point cut initially expected at the SARB’s March meeting has already been scratched out by forecasters, with the baseline expectation now a hold.
However, traders are already pricing in the possibility of a rate hike due to the turmoil. While this is not an expected view, the longer the war drags on—and markets a disrupted—the more likely it becomes.
“A price shock, from oil, food or both, would likely be looked through by the MPC if short-lived, and without second-round effects flowing into other prices, leaving interest rates unchanged,” said Investec Chief Economist, Annabel Bishop/
“The MPC will watch to see if the impact of higher oil prices on inflation is temporary, or is embedded—becomes permanent—changing interest rates to prevent a more permanent move away from the 3.0% y/y inflation target.”
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