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The possibility of fuel reaching R40 a litre as Russia’s invasion of Ukraine wreaks havoc on global oil supplies is the focus in this edition of Business Day Spotlight. 

Host Mudiwa Gavaza is joined by Koketso Mano, an economist at FNB. 

Mano explains how movements in the oil markets could affect local fuel prices.

Join the discussion: 

With oil trading at an almost 8-year high, speculation is mounting that fuel prices could reach as much as R40 per litre, a terrible prospect for the SA economy.

While R40 is a possibility, Mano says her team has been working with different scenarios, looking at oil reaching $150 a barrel, with local fuel prices ranging between R24 and R30 a litre. 

At the time of this discussion, Brent Crude was trading at $127 a barrel.

Mudiwa Gavaza. Picture: DOROTHY KGOSI
Mudiwa Gavaza. Picture: DOROTHY KGOSI

To date, Brent Crude is up more than 85% over the last year, owing to demand as economic activity has picked up around the world. That has been pushed even more in recent weeks by Russia, one of the world’s largest oil producers, invading Ukraine. 

Oil prices jumped on last week as supply disruptions mounted following sanctions imposed on Russian banks amid the Ukraine crisis. This had led traders to scramble for alternative sources of oil in an already squeezed market. 

Mano details how the global oil market could react to the conflict in Russia; options for the government to ease the shock of price increases on consumers and possible monetary policy interventions. 

Topics of discussion include factors currently affecting global oil prices, as well as local fuel rates; the effects of higher oil prices on the global economy; the effects of the Russia-Ukraine war on emerging-market sentiment; and thoughts pertaining to SA’s latest round of load-shedding. 

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 Business Day Spotlight is a MultimediaLIVE production.


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