South Africa is vulnerable to both oil price and dollar shifts. Oil prices are back in focus as renewed geopolitical tensions inject fresh volatility into global energy markets, reviving concerns for oil-importing economies such as South Africa. Brent crude has edged higher in recent sessions, with traders pricing in increased risk linked to instability in the Middle East – a region central to global oil supply.
The liquid breached $70 to the barrel in the early afternoon. While physical supply disruptions have not materialised, markets are reacting to the rising probability of escalation, particularly involving Iran. Oil prices are highly sensitive to geopolitical threats in the region, given the strategic importance of the Strait of Hormuz, through which a significant share of the world’s crude exports flow.
Even theperception of riskcan lift prices as traders build a premium into the market. Wichard Cilliers, head of Market Risk at TreasuryONE, says geopolitical tensions are once again shaping both oil and currency dynamics. “Oil prices have moved higher amid continued tensions in the Middle East, which could weigh on oil-importing countries like South Africa if gains persist,” said Cilliers.
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Cilliers added that “ongoing geopolitical tensions, including developments around Iran, are also supporting the dollar as investors seek safer assets”. Theinterplay between oil prices and the dollarpresents a double-edged risk for emerging markets. Heightened global uncertainty typically drives investors towards safe-haven assets, strengthening the dollar while pressuring risk-sensitive currencies such as the rand.
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