Goldman Sachs’ forecast that Brent crude could rise to $120 (R1,944) per barrel in 2026 has raised concerns about soaring inflation and slowing growth, globally and in South Africa.
And according to a new report from Goldman Sachs, $120-per-barrel oil could be just around the corner. The forecast no longer seems far-fetched given the price ratcheted up sharply on Thursday by almost 5% to trade at $105 per barrel on Friday.
This after steadily increasing through the week through the $100 a barrel psychological landmark, due to potential supply disruptions following reports of US strikes on Iranian tankers and Houthi attacks on Saudi energy facilities.
Brent crude eased to around $104 a barrel on Friday, pulling back from a 9% weekly surge, after Iran said it would meet Gulf states in Oman, with GCC diplomats set to hold talks with Tehran on Monday on a possible temporary arrangement to manage shipping through the Strait of Hormuz.
With the higher oil prices came renewed inflation fears, both globally and in South Africa, which imports most of its oil requirements in dollars. Economists say a sustained oil price above $100 will increase fuel and transport costs, adding to inflationary pressure and weakening household finances and business confidence.
Independent economic analyst Professor Bonke Dumisa agrees that the Goldman Sachs forecast is possible, due to the continuing conflict and uncertainty in the Middle East.
“The US President Donald Trump is so obsessed with continuing with unwinnable military attacks on Iran. The first phase of these unwinnable military attacks on Iran saw the Brent crude oil price move from $72.98 per barrel on Friday, February 27, 2026, to as high as $121.30 per barrel on Thursday April 30.”
Dumisa added that the 2026 FIFA Soccer World Cup "did save us globally" because Trump moved his attention to the football tournament, which saw the crude oil price reducing.
“It was only after the FIFA World Cup that Donald Trump resumed his attention to Iran that has resulted in the crude oil jumping to above $100 from this past Wednesday,” he said.
Meanwhile, Trump predicted the ongoing US-Iran war will end "immediately" after November's midterm elections, arguing Iran is prolonging the conflict to keep oil prices high and influence the vote, and said crude prices won't fall until the war concludes post-election.
Unisa economist Dr Eliphas Ndou said if Brent crude remained near $120 a barrel, higher oil prices will push up fuel costs. He said the government may also be reluctant to provide substantial relief through reductions in the fuel levy as it did between April and June this year.
“Consumer price inflation will remain persistently elevated, eroding the purchasing power of consumers and SMMEs,” Ndou said.
He said consumer and business confidence could weaken significantly.
Although the shock will originate on the supply side of the economy, the South African Reserve Bank could face pressure to raise the repo rate to contain inflation and prevent inflation expectations from becoming entrenched, said Ndou.
He said the combination of direct and indirect effects could weaken domestic economic growth and increase the risk of growth remaining below 1%.
“Spillovers from weaker global economic growth will compound the current low-growth problem as external demand declines,” he said.
Stagflation risk
Dr Simphiwe Madikizela, a senior lecturer in economics at Unisa’s School of Graduate Business and Leadership, said the prospect of Brent crude rising towards $120 a barrel represented a serious risk for South Africa.
“Oil is not only a transport cost; it is an economy-wide input. A prolonged oil shock would raise the cost of transporting people and goods, farming, mining, manufacturing, construction and logistics,” Madikizela said.
He said this would amount to a supply-side inflation shock, particularly at a time when the economy was already experiencing weak growth.
Statistics South Africa reported that real GDP contracted by 0.2% quarter on quarter in the second quarter of 2026, after growing by 0.4% in the first quarter. Mining, trade and manufacturing were among the sectors that contracted. Manufacturing is said to already be in a technical recession.
“The biggest concern is the possibility of stagflation — weaker economic growth occurring at the same time as higher inflation,” Madikizela said.
He said the shock would create a difficult policy dilemma for the SARB because inflation could rise even as economic activity weakened.
“A prolonged oil shock could further weaken household purchasing power,” he said.
Global recession risk
North-West University Business School economist Professor Raymond Parsons said persistently higher oil prices and possible interest-rate increases by major central banks could further dent global growth.
He said, however, that a global recession was unlikely based on the available data.
“Most economists estimate that it would need sustained oil prices above $120 to $150 a barrel to precipitate a full-blown world recession,” Parsons said.
The International Monetary Fund projected global growth of 3% in 2026, while warning that renewed conflict and energy-price disruption remained downside risks. Its July forecast was based on an average oil price of about $89 a barrel for 2026.
Parsons said oil prices were expected to be lower by December, although uncertainty remained high.
“For South Africa, there is still too much uncertainty in the current global situation to say exactly what the further impact may be on the domestic economy in the months ahead,” he said.
He added that the SARB’s Monetary Policy Committee would provide an updated assessment of inflation, growth and interest rates at its next meeting.
Independent economist Ulrich Joubert said a sustained oil-price increase was possible because of tensions in the Middle East and continued uncertainty around shipping through the Strait of Hormuz.
Professor Waldo Krugell, an economist at North-West University, said higher oil prices will result in higher petrol and diesel prices, pushing up inflation and increasing pressure for further repo-rate increases.
PSG senior economist Johann Els said a global recession was possible only if Brent crude remained at about $120 a barrel for several months.
yogashen.pillay@nationalmg.co.za