The week opened on Monday with the price of Brent crude trading at $108.22 per barrel, marking a four-month high.
Bianca Botes, Managing Director at Citadel Global said that this surge followed a rally of approximately 9% last week, driven by Saudi Arabia's decision to close its main East-West pipeline following drone strikes in the region, coupled with postponed discussions regarding the reopening of the crucial Strait of Hormuz.
"As the week progresses, the focus shifts to the Federal Reserve's impending decision on interest rates. With the US calendar notably quiet on Monday, expectations are building towards Wednesday's meeting, where a 25-basis point hike is now priced in with approximately 86% certainty," Botes said.
"Additionally, Wednesday will unveil US retail sales figures, providing insights into the consumer and labour market's resilience against rising rates. As the week unfolds, attention will also be on the European Central Bank (ECB), where President Christine Lagarde will address a busy slate of events, followed by crucial decisions from the Bank of England (BoE) and the Bank of Japan (BoJ) on Thursday and Friday," Botes added.
Meanwhile, gold prices are facing headwinds as they traded at $4269.96 per ounce on Monday afternoon, heading towards a third consecutive weekly loss.
"The upward pressure on the dollar amid expectations of tighter Federal Reserve policy appears to outweigh gold's traditional role as a safe-haven asset," Botes added.
Rand weakens ahead of rate decisions
On the local front, the South African rand has retreated on Monday afternoon, giving back last week’s gains as the surge in oil prices, alongside a firmer dollar and approaching decisions from both the Fed and the South African Reserve Bank (Sarb), dampens risk sentiment.
The local currency weakened by approximately 1.17% against the dollar, trading at R16.32 to the US dollar, 18.72 to the Euro, and R21.86 to the British pound.
Why higher oil prices matter for South Africa
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 last Thursday by almost 5% to trade at $105 per barrel on Friday, with it opening much higher on Monday this week.
This comes after it steadily increased last 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.
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.
ashley.lechman@nationalmg.co.za