As the US-Israeli war with Iran enters its second week, oil prices have surged to $104-$120 per barrel amid Strait of Hormuz blockades, intensifying inflation and fuel cost fears in South Africa. With the rand at R16.90/$, analysts predict petrol above R23/litre and potential SARB rate hikes.
Building on last week's initial strikes that killed Iran's supreme leader Ali Khamenei and closed the Strait of Hormuz, the conflict has now disrupted 20% of global oil for over a week. Brent crude settled at $104/barrel after peaking near $120, with a 30% one-day gain—the largest in nearly five years—echoing 2022 Russia-Iran tensions.
South Africa's rand has weakened to R16.90/$ from R15.90 pre-conflict, driving unleaded 93 petrol estimates over R3/litre higher to R23.30—nearing the 2022 record of R26.31. Investec's Annabel Bishop warns sustained oil above $110 and rand below R16.80 could lift Q2 2026 CPI above 4%, prompting rate hikes from the current 6.75% repo rate (Jan CPI: 3.5%). SARB is revising scenarios ahead of its March 26 MPC meeting, with Governor Lesetja Kganyago assessing shock persistence.
Broader impacts include agriculture: 80% of SA's 2M-ton fertilizer imports face delays, per Wandile Sihlobo, reminiscent of Russia-Ukraine effects. Motor industry warns of passed-on costs to consumers. G7 ministers are eyeing 200-300M barrel SPR releases via IEA.
