The recent run in the oil price may be good news for investors in Sasol, but it’s not fantastic for struggling SA consumers.
This week, the oil price threatened to break the US$60/barrel mark for the first time in two years. This means oil has climbed by more than 20% since July.
Of course, short-term blips happen often. But it seems there may be something structural happening, that oil may finally be stretching in preparation for an increase — even if it doesn’t lift much beyond $60 for the foreseeable future.
This week, analysts at Citigroup said there’s likely to be a persistent shortage of oil in the next few months, rather than a glut, according to Bloomberg.
It’s a significant assessment, considering that many expected Opec, the organisation of 14 oil-producing nations, to flood the world with new supply next year. Other experts concurred. Trading house Trafigura said this week that the oil price could be set to lift — and a shortage may even be likely within two years.
Still, there is a ceiling to the oil price — since US shale producers can respond quickly, by bumping up supply. The good thing is that this is also likely to soften huge spikes in the oil price.
So consumers can expect higher petrol prices, but they’re unlikely to rocket any time soon. Perhaps this is why the Reserve Bank didn’t cut rates.