Oil surge clouds SA fuel outlook as markets retreat

South African markets enter the week under pressure from elevated oil prices, with renewed attacks on Saudi Arabia threatening to erode potential fuel-price relief and sustain global inflation concerns.

The JSE All Share index closed Friday 0.47% lower at 108,020, while the Top 40 fell 0.55% to 99,991, according to Sharenet figures cited in the supplied market summary. The rand ended the week at about R16.59 to the dollar.

Brent crude eased in early Asian trading on Monday, 26 October, but remained near its highest levels in six months. Reuters reported that the international benchmark was down 1.34% at $115.16 a barrel, while US West Texas Intermediate crude fell 1.55% to $101.67.

Photo: AI-generated illustration

The retreat followed a strong weekly advance. Brent settled at $116.72 on Friday, gaining about 6% over the week, while US crude rose 2.3%.

Supply concerns remained prominent after Yemen’s Houthis claimed further attacks on Saudi airports and oil facilities over the weekend. Saudi Arabia said on Sunday that it had intercepted additional missiles and drones, Reuters reported.

Partial operations resumed at Riyadh’s main airport on Sunday following damage from an earlier attack, even as the Houthis threatened further strikes.

The attacks have compounded uncertainty over the stand-off between Washington and Tehran. According to Associated Press reporting cited in the supplied summary, US President Donald Trump said on Sunday that he was weighing an agreement with Iran against renewed military action.

For South Africa, sustained oil prices above $100 a barrel threaten to increase import costs and put further pressure on transport, agriculture and household budgets. Rand weakness would amplify those pressures because international petroleum products are priced in dollars.

Temporary fuel-levy reductions announced by Finance Minister Enoch Godongwana offer some cushioning. Reuters reported that the first phase, beginning on 4 November, will reduce the petrol levy by R1.50 a litre and the diesel levy by R3.

Those reductions are separate from the monthly adjustment linked to international product prices and the exchange rate. Higher oil prices could therefore offset part of the benefit motorists and businesses receive.

Wall Street also ended Friday lower. The Dow Jones Industrial Average fell 1.2% to 52,215.16, the S&P 500 lost 0.5% to 7,623.68 and the Nasdaq Composite slipped 0.2% to 25,955.34, the Associated Press reported.

Investors now face a week in which developments in the Middle East and central-bank decisions could determine whether the pressure on equities, currencies and borrowing costs persists.

Sources: Reuters, oil-market reports, 23 and 26 October , and South African fuel-levy report, 21 October; Associated Press, US market close, 23 October; supplied market summary citing Sharenet, News24 and Associated Press.