JOHANNESBURG, Mar 5 – South Africa’s finance minister has warned that the recent surge in global oil prices could place renewed pressure on inflation, as geopolitical tensions in the Middle East disrupt key energy supply routes.
Speaking in an interview on Bloomberg Television in London, Enoch Godongwana said prolonged increases in energy prices would likely affect the country’s inflation outlook.
The warning comes as Brent Crude prices have surged nearly 16 percent this week following major disruptions to shipping through the strategically vital Strait of Hormuz, a key passage that carries roughly one fifth of the world’s oil supply.
Godongwana noted that South Africa has limited influence over global fuel prices, describing the country as a “price taker” in international energy markets. Sustained increases in oil prices, he said, could translate into higher domestic inflation, particularly if the conflict persists for several weeks.
His remarks follow the presentation of the government’s latest national budget, which projected a stabilization in the country’s debt-to-GDP ratio for the first time in nearly two decades. The fiscal plan also outlined a narrower budget deficit than previously anticipated.
The improved fiscal outlook has fueled optimism that Africa’s most industrialized economy may be emerging from a prolonged period of slow growth. Authorities expect that stabilizing public debt and gradually reducing it in the coming years could create additional fiscal space for infrastructure investment, economic expansion and job creation.
However, the geopolitical turmoil triggered by recent military actions involving the United States and Israel against Iran could challenge those projections if global trade flows and economic growth weaken.
Godongwana acknowledged that the conflict was not factored into the government’s original budget assumptions, noting that policymakers may need to reassess projections depending on how global markets respond to the evolving situation.
Despite the uncertainty, the government says it remains committed to structural economic reforms aimed at strengthening long-term growth.
South Africa’s National Treasury of South Africa currently raises about 85 percent of its borrowing in local currency, with the remainder sourced in foreign currencies, a balance the finance minister expects to maintain.
Investor sentiment toward the country also appears relatively stable. According to Godongwana, analysts expect stronger global demand for commodities, a development that could benefit South Africa given its position as a major exporter of minerals and raw materials.
While rising oil prices pose risks to inflation, stronger commodity markets could provide some offsetting support for the country’s economic outlook.
