Brent crude climbed above $90 a barrel on Tuesday afternoon as renewed conflict between the United States and Iran heightened inflation risks, with economists warning the South African Reserve Bank could respond with another interest rate hike.
Renewed conflict between the United States and Iran pushed global markets back into risk off mode on Tuesday, with Brent crude climbing to $90.37 a barrel on Tuesday afternoon as investors weighed the potential impact of prolonged supply disruptions through the Strait of Hormuz.
The jump in oil prices has intensified concerns about inflation globally and in South Africa, placing additional focus on the South African Reserve Bank's (Sarb's) Monetary Policy Committee (MPC) meeting on Thursday, where economists remain divided over whether policymakers will raise interest rates again.
Patrick Buthelezi, economist at Sanlam Investments, said renewed hostilities had added another layer of uncertainty to an already fragile global economy.
"Renewed hostilities between the US and Iran are testing the June memorandum of understanding. While diplomatic channels remain open, the situation continues to be fluid and fragile," he said.
