Middle East war: higher fuel prices, inflation to hit SA

SOUTH Africa could be staring down the barrel of a renewed fuel and inflation shock as military strikes by the US and Israel on Iran send tremors through global energy markets.

- TRACY-LYNN RUITERS

What may appear to be a distant geopolitical confrontation is rapidly translating into hard economic consequences: a weaker rand, rising oil prices and mounting inflation risks that could hit households and businesses within weeks.

The surge in oil prices is not incidental. It is rooted in the strategic importance of the Middle East to global energy supply. Iran remains a significant oil producer and is positioned alongside one of the most critical oil transit routes in the world, the Strait of Hormuz.

This narrow shipping corridor connects the Persian Gulf to international markets and carries a substantial share of globally traded crude oil each day. When conflict threatens this passage, markets react swiftly and often aggressively.

Oil prices do not only rise when supply is physically interrupted. They also increase when credible risks emerge that supply could be disrupted. Traders factor uncertainty into contracts. Shipping insurance premiums climb. Freight and logistical costs rise. Buyers begin securing supply at higher prices to hedge against potential shortages. Even the possibility of interference with exports can push global oil benchmarks sharply upward.