‘If we do see significantly higher oil prices, that then will translate through into higher inflation, supporting the higher for longer narrative on interest rates,’ says Annabel Bishop, chief economist at Investec.
JEREMY MAGGS: The outbreak of military conflict in the Middle East is likely to increase the risk of higher inflation, as well as deal a blow to global economic confidence. Along with the ongoing conflict in Ukraine, where does this leave an already fragile South African economy?
So a lot of that’s been as a consequence of higher interest rates globally. It’s been as a consequence of sentiment in financial markets. Now for South Africa, we do get quite a lot of our oil from Nigeria and from other countries in Africa. But, of course, what is key is the Brent crude oil price and that is the oil price that our petroleum products are priced against. If you think about our petrol and our diesel, and that typically faces upward pressure. So there are some concerns.
ANNABEL BISHOP: Yes, Jeremy, you’re quite right. We are a very small open economy and while we do export a lot in terms of commodities, that typically tends to be food, bulk commodities, minerals. We import all our petroleum products, oil, and that obviously places us at great risk in terms of what happens internationally.
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