The unrest in the Middle East will impact on ordinary South African consumers’ pockets.
This is according to local economists, who say the increase in oil prices has had a major effect on the global economy.
The price rise comes amid political turmoil in Bahrain - neighbour to the world’s biggest oil exporter, Saudi Arabia – and oil-rich Libya in north Africa.
International concern over whether the unrest in Bahrain could spill over into Saudi Arabia is growing, which in turn has raised worries over the possible disruption of the world’s oil supply.
The concern was reflected in oil prices, with Brent crude reportedly escalating to $104 (R471) a barrel last week – the highest in 28 weeks – before it dropped again due to other factors.
The turmoil in the Middle East has been a factor in gold prices posting their best weekly performance since December.
Economist Dawie Roodt said South Africans could expect to see significant increases in the petrol price over the next few months.
The cost of petrol went up by 26c a litre this month – the fifth increase in the past six months.
Roodt forecast that in the current economic climate, the price of petrol could easily increase by 30c a litre.
“Also, keep in mind that the minister of finance is expected to add another 15 to 20c a litre in fuel levies to the petrol price, so the price of petrol could increase by as much as 50c in the next couple of months.”
Another local economist, Richard Downing, said the big threat to the economy was not the supply of oil but the transport of it.
“The price increase is good for the countries that export oil, but it’s not good for us or the rest of the global economy,” he said.
Downing believed that consumers, who were already under pressure because of the rise in food and electricity prices, would have to fork out even more. As it was, the pump price of petrol was 20 percent higher than it was this time last year. “Petrol prices impact on businesses, who up their prices to keep up… consumers bear the brunt.”
If the turmoil in north Africa and the Middle East worsened and the transport of oil was disrupted, it could have a dire economic impact on economies around the world. - Sunday Argus
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