Concerns over global energy supplies, amid geopolitical friction in the Middle East, remain heightened after the International Energy Agency (IEA) highlighted the most substantial global oil deficit in five years, fuelling further speculation about future pricing.
The IEA report noted that although the market is projected to return to surplus towards the end of this year, risks remain substantial and the urgency of reopening the Strait of Hormuz has increased, as previously available inventory buffers are rapidly depleting.
The current situation leaves net importers like South Africa increasingly vulnerable to secondary inflationary shocks.
The standoff over the Strait of Hormuz remains a key factor as weekend traffic through the waterway dropped sharply, with only five vessels crossing on Saturday and none on Sunday, compared with 31 vessels during the previous weekend, according to data cited by Reuters from Kpler.
Iranian Deputy Foreign Minister Kazem Gharibabadi said on Saturday that the strait would only be opened and closed under Iran's command.
“So long as you do not accept the reality of defeat and stop indulging in fantasies, Iran will continue to enforce the blockade,” Gharibabadi said.
The oil market is also increasingly being shaped by political pressure in the US, where higher fuel prices are becoming a growing concern for the administration of President Donald Trump.
Trump urged Americans on Friday to accept “slightly higher” gasoline prices because of the conflict with Iran.
US Vice President JD Vance said the administration's immediate priority was now to bring oil and fuel prices down for American consumers, highlighting the economic importance of reopening the Strait of Hormuz.
“I know that oil is down and it's way down from the highs in the early days of the conflict,” Vance said. “That's goal number one, keep oil and gas cheap for Americans all over our country.”
He added that ensuring Iran does not obtain a nuclear weapon remained another key objective.
The comments underline the extent to which the disruption around the strait has become an economic issue for Washington, with higher crude prices feeding directly into petrol prices, inflation, and household costs.
For South Africa, the prolonged disruption presents a significant risk.
Bianca Botes, managing director at Citadel Global, pointed to the International Energy Agency's comments on the oil deficit, noting that investors remained alert to ongoing supply disruptions.
The higher oil price comes as South African households and businesses remain sensitive to fuel costs, while the rand's recent stability provides only a partial buffer against higher international crude prices.
The combination of a weaker rand and elevated crude prices could put further pressure on domestic fuel prices if current conditions persist.
The impact of the Hormuz disruption extends beyond crude oil. The cost of shipping goods through several global maritime chokepoints has increased sharply over the past month as wars and climate-related disruptions place additional pressure on global supply chains, according to Anchor Capital.
"Higher shipping costs could ultimately filter through to consumer prices, particularly if energy and freight costs remain elevated for an extended period. For South Africa, this creates a difficult environment because higher fuel and transport costs can feed into the prices of food, manufactured goods, and other essential products. The country's economy is therefore exposed to the oil shock through several channels, including petrol and diesel prices, transport costs, inflation, and business operating expenses," Anchor Capital stated.
The outlook for oil prices this week is likely to remain heavily dependent on developments around the Strait of Hormuz and the direction of US-Iran negotiations.
Botes said markets would also be watching a number of important US economic releases this week, including Wednesday's minutes from the Federal Open Market Committee meeting, Thursday's jobless claims, and the Philadelphia Federal Reserve manufacturing index.
Friday will bring preliminary purchasing managers' index readings ahead of the Jackson Hole Economic Symposium next week.
ashley.lechman@nationalmg.co.za