Brendon Verster, senior economist and author of the research briefing, said the impact of rising oil prices on economies like South Africa is both immediate and far-reaching.
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Oxford Economics Africa has warned that South Africa’s fragile economic recovery could face renewed strain in 2026 if global oil prices surge is maintained by the escalating geopolitical tensions in the Middle East.
The country's gross domestic product (GDP) growth is expected to expand by 1.6% in 2026 and gradually accelerate by 0.2 percentage points each year over the medium term, reaching 2% by 2028.
A research briefing by Oxford Economics last week outlined a scenario in which Brent crude oil prices spike to $140 per barrel for two months following the closure of the Strait of Hormuz.
In this case, prices are expected to remain volatile, averaging just over $94 per barrel for 2026 after peaking at $133 in the second quarter and easing to $87 in the third. In this scenario, Africa's heavyweight economies, including Ghana, South Africa, and Kenya, would see growth lower by 0.3 percentage points.
But Oxford's latest update projects that Brent crude oil prices will average around $90 per barrel this year, with the second quarter average spiking to $114 per barrel, with trade returning to normal levels over six months.
For South Africa, a net importer of oil, the implications are largely negative. Higher global prices are expected to feed directly into domestic inflation, raising transport and production costs while eroding household purchasing power.
Brendon Verster, senior economist and author of the research briefing, said the impact of rising oil prices on economies like South Africa is both immediate and far-reaching.
“Across all countries where the price shock has a negative impact, higher oil prices will ultimately drive up production costs and consumer prices, adversely impact consumption demand, and put external balances under strain,” he said.
South Africa is among the countries expected to experience one of the sharper slowdowns in growth under this scenario. The country’s reliance on imported refined petroleum means global price increases are quickly transmitted into the local economy, particularly through fuel, electricity and food costs.
After inflation eased to multi-decade lows in 2025, creating room for interest rate cuts, renewed price pressures could force the South African Reserve Bank to pause or even reverse its easing cycle.
“Rising global oil prices, coupled with exchange rate weakness amid heightened geopolitical tensions, would likely prompt monetary authorities to pause their easing cycle or even lift policy rates,” Verster said.
Such a shift would weigh on already fragile consumer demand and delay a broader recovery in credit growth and investment.
Beyond inflation, fuel security is emerging as a critical concern. Although South Africa maintains relatively higher strategic reserves than many African peers, equivalent to around two months of supply, these buffers could prove insufficient in a prolonged disruption.
Licensed manufacturers and wholesalers are required to hold about 14 days of refined fuel reserves, but broader continental constraints heighten the risk of supply bottlenecks. Africa as a whole imports roughly 40% of its refined petroleum needs, with a significant share sourced from the Middle East.
Should the crisis persist, competition for available supply could intensify, particularly if global stockpile releases are allocated based on market pricing rather than need.
South Africa’s vulnerability is further compounded by structural constraints in refining capacity across the continent. Despite being one of Africa’s largest fuel consumers, the country still depends heavily on imports, exposing it to both price and supply shocks.
The knock-on effects extend beyond energy. The Gulf region is a major producer of fertilisers, and disruptions to supply chains are expected to push up global fertiliser prices. This, in turn, could drive higher food inflation, placing additional strain on South African households already grappling with elevated living costs.
The broader macroeconomic picture for Africa remains mixed. While oil exporters such as Algeria may benefit from higher prices, most economies—including South Africa—are likely to see slower growth as inflation rises and external balances weaken.
Verster cautioned that policymakers can no longer afford to overlook the broader implications of energy shocks.
“The old central bank doctrine of looking beyond energy shocks no longer holds universally,” he said. “Inflation expectations can quickly become unanchored, triggering second-round effects on wages and broader pricing.”
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