Brent crude hits fresh seven-year high in rally that could fuel inflation

International oil prices hit a fresh seven-year high on Monday, with Brent crude closing in on the $100 per barrel mark, stretching a month-long rally that could worsen the global inflation outlook.

Brent crude rose just more than 1% to $91 per barrel in early trade, fuelled by rising demand and short-term supply concerns as geopolitical tension between Russia and Ukraine linger. Brent crude is up nearly 18% since the start of the year.

The rand was steady at R15.58/$ after wild gyrations last week during which the Reserve Bank raised its inflation forecast to 4.9% for 2022 from a previous estimate of 4.3%.

The rand is still 2.2% stronger against the dollar since the start of the year. A stronger rand tends to soften the effect of higher international oil prices and other imported goods.

Rising global inflation has been a bugbear for policymakers, who have had to strike a fine balance between hiking rates to keep prices under control and nursing the global economic recovery after the Covid-19 pandemic.

The JSE is likely to trade higher in line with counterparts in Asia, where the big technology stocks such as Tencent outperformed.

Bourses were boosted by Wall Street on Friday, where the S&P 500, tech-heavy Nasdaq and the Dow Jones Industrial Average rebounded strongly from the sell-off earlier in the month.

mahlangua@businesslive.co.za