Oil shock could stall South Africa's recovery as fuel risks and inflation pressures mount

OXFORD Economics Africa has warned that South Africa's fragile economic recovery could face renewed strain in 2026 if global oil prices surge is maintained by the escalating geopolitical tensions in the Middle East.

- SIPHELELE DLUDLA

The country's gross domestic product (GDP) growth is expected to expand by 1.6% in 2026 and gradually accelerate by 0.2 percentage points each year over the medium term, reaching 2% by 2028.

A research briefing by Oxford Economics last week outlined a scenario in which Brent crude oil prices spike to $140 per barrel for two months following the closure of the Strait of Hormuz.

In this case, prices are expected to remain volatile, averaging just over $94 per barrel for 2026 after peaking at $133 in the second quarter and easing to $87 in the third. In this scenario, Africa's heavyweight economies, including Ghana, South Africa, and Kenya, would see growth lower by 0.3 percentage points.

But Oxford's latest update projects that Brent crude oil prices will average around $90 per barrel this year, with the second quarter average spiking to $114 per barrel, with trade returning to normal levels over six months.

For South Africa, a net importer of oil, the implications are largely negative. Higher global prices are expected to feed directly into domestic inflation, raising transport and production costs while eroding household purchasing power.