Rising oil prices are expected to exert pressure on prices after all types of oil rose for the fourth consecutive day yesterday as the EU countries considered banning Russian oil imports in response to the war in Ukraine. Picture: Karen Sandison/African News Agency(ANA)
RISING oil prices are expected to exert pressure on prices after all types of oil rose for the fourth consecutive day yesterday as the EU countries considered banning Russian oil imports in response to the war in Ukraine.
The price of Brent crude oil climbed 3.7 percent to above $119.31 (R1 783) a barrel early yesterday before softening to $114.22 a barrel.
The move followed a 7 percent jump on Monday as the potential for more supply disruptions weighed on the volatile markets.
European foreign ministers yesterday were debating whether to join the US in sanctioning Russian oil, with some countries, including Germany, arguing that the bloc was too dependent on Russian energy.
Oil prices were also pushed higher by reports that Houthi rebels launched multiple attacks at several Saudi Aramco sites, causing a temporary decline in refinery output.
FXTM’s senior research analyst, Lukman Otunuga, said the crude oil prices could challenge $120 a barrel and beyond if a daily close above $115 is achieved.
“The global commodity remains highly sensitive to geopolitical risks and concerns about a supply crunch, especially following the latest development with the EU.
“Should the bloc join the Russian oil embargo, this could propel oil prices higher as supply fears mount.”
Investors also continued to monitor the Russia-Ukraine war as ongoing peace talks failed to make progress, as well as an Omicron subvariant that is spreading rapidly across Europe.
Locally, President Cyril Ramaphosa said that South Africa risked being rocked by strong economic headwinds in the coming months as the “conflict between Russia and Ukraine” affected the global economy.
South Africans can expect record fuel price hikes in April as the midmonth fuel data released by the Central Energy Fund projects between R2.07 and R2.15 a litre increases for petrol, while diesel could rise by between R2.94/l and R3.08/l and illuminating paraffin by R2.51/l.
This means fuel prices could touch R24/l for petrol and R23.60 for diesel for the first time ever, after rising by R1.46 last month, and there will be a knock-on effect on the prices of a number of consumer goods.
If realised, these will be the biggest increases to fuel prices in South Africa’s history and will have major ramifications for all consumers and the economy in general.
Investec chief economist Annabel Bishop said inflation was expected to be elevated on high commodity prices, particularly oil, which is South Africa’s main import.
“Broader sanctions on Russian fossil fuels, extending through Europe, is expected to see the Brent crude oil price escalate towards $130 per barrel, as Saudi Arabia has significant capacity to increase production, while an Iranian nuclear deal could see further significant supply entering the market,” she said.
The rise in oil prices, however, saw the share price of South Africa’s petrochemical company Sasol gaining 2 percent to R361.44 a share.
Stocks on the JSE also rose at a near 3-week high, with the JSE All Share index swelling 1.17 percent to 75 725 index points, its highest since March 3, driven by banks and financials.
The JSE was buoyed by the US Federal Reserve chairperson Jerome Powell, who reiterated the central bank’s commitment to controlling inflation through a rapid series of interest-rate increases if appropriate.
siphelele.dludla@inl.co.za
BUSINESS REPORT ONLINE