SA could face more fuel price hikes as oil prices spiral
SA could face further fuel price hikes, squeezing inflation and raising the spectre of further interest rate hikes, as oil prices spiral amid the conflict in Ukraine.
The price of Brent crude topped $100 a barrel for the first time in seven years on Thursday after Russian President Vladimir Putin reportedly authorised military operations against Ukraine, raising supply disruption concerns.
Brent crude surged nearly 5% to trade at $101.31 a barrel in early trade, bringing year-to-date gains to 30%.
The potential for a full-blown military conflict has triggered increases in international soft commodities. Both Ukraine and Russia account for about 25% of global wheat exports and are significant producers of maize and sunflower oil.
The rand was relatively resilient in the context of the heightened market fears, losing just 1% to trade at R15.27/$, its weakest level in two weeks. By contrast, Russia’s rouble plummeted 10% against the dollar.
Elsewhere, stock markets tumbled between 2% and 3% as investors fled risky assets. Hong Kong’s Hang Seng and Australia’s ASX 200 shed 3% apiece.
Safe-haven assets were predictably in high demand, with gold gaining nearly 2% to trade at its highest level in a year at about $1,941.92oz.
JSE-listed gold stocks are expected to head higher, limiting the potential fall of the local share market, which was poised to trade lower in line with its peers.
The key question for investors will be how central banks react to conflict between Russia and Ukraine, which threatens to destabilise the global economic recovery.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.