The Iran war has sent oil prices soaring above $100 a barrel, with Tehran firing a new barrage of missiles at Israel and its crude-exporting Gulf neighbours under new leader Mojtaba Khamanei. On his first day in power, Khamanei, the 56-year-old son of slain leader Ali Khamenei, renewed Iran’s missile and drone attacks on Saudi Arabia, Bahrain, Qatar, the UAE, and Israel.
Another missile was fired at NATO member Turkey, the second such incident in five days, with the alliance’s air defences intercepting it before it could hit its target. The key shipping route through the Strait of Hormuz off Iran remains closed to almost all oil tankers, causing the price of benchmark crude oil contracts to spiral to their highest levels since Russia’s invasion of Ukraine in 2022.
Oil Price Impact on South Africa
EU Economy Commissioner Valdis Dombrovskis warned that a “more protracted” war would lead to a “stagflationary shock” of high inflation and low growth for the world economy. Finance ministers from the G7 group of rich nations were due to meet later in the day to discuss releasing strategic oil reserves to try to dampen prices, which are up around 40-50% since the US and Israel launched their first attacks.
According to the International Energy Agency, the world’s oil demand is expected to increase by 1.2 million barrels per day in 2023. The current oil price hike is likely to have a significant impact on South Africa, where petrol prices are already high. The South African Reserve Bank has warned that higher oil prices could lead to higher inflation and interest rates.
Potential Consequences for South Africans
The consequences of the Iran war on South Africa are far-reaching. Some potential consequences include:
- Highest oil prices in years, leading to increased petrol costs for South Africans
- Possible shortages of petrol and diesel, leading to queues at petrol stations
- Higher inflation and interest rates, affecting the overall economy and consumer spending
- Potential impact on the rand, leading to a decrease in its value against major currencies
US Secretary of State Marco Rubio said on Monday that “I think we are all seeing right now the threat this clerical regime poses to the region and to the world.” Iran faced a fresh blitz of US and Israeli strikes after its Assembly of Experts, the top clerical body, appointed its first new supreme leader in 37 years.
