Surging oil prices put South Africa’s fragile recovery at risk

Oil markets swung sharply this week, with Brent crude briefly rising above $100 a barrel twice before slipping back below that level, a reminder that energy costs are now a central risk for many African economies. Economists at Standard Bank Group estimate that every $10 increase in oil prices could shave about 20 basis points off South Africa’s economic growth.

The warning comes as conflict in the Middle East clouds the global outlook. Chief executive Sim Tshabalala said sustained high prices would eventually filter through to inflation, borrowing costs and, ultimately, growth. That risk appears just as South Africa posted its strongest annual performance in three years, offering cautious optimism after a long period of weak expansion.

Oil slips despite weekly surge

Brent retreated on Friday after an 8 percent weekly jump, as traders weighed fighting involving Iran and U.S. steps to contain energy costs. Washington said it would temporarily allow purchases of Russian oil stranded at sea and discussed naval escorts for tankers moving through the Strait of Hormuz.

A planned release of about 400 million barrels by the International Energy Agency has so far done little to calm markets amid continued air strikes. “We are concerned about the conflict in the Middle East,” Tshabalala said, warning that unless fighting eases soon, higher oil prices will push up global inflation and keep interest rates elevated. 

Across Africa, the consequences will not be uniform. Oil exporters such as Nigeria and Angola could see stronger export earnings, while import-dependent economies, including South Africa and several East African nations, would face higher fuel bills, rising transport costs and pressure on food prices. More expensive fertilizer could also threaten food security in vulnerable regions. Still, some losses may be offset by firmer prices for metals and other commodities.

South Africa growth improves amid risks

Recent growth data show why the stakes are high. Figures from Statistics South Africa indicate gross domestic product expanded 1.1 percent in 2025, up from 0.5 percent in 2024 — the fastest pace since 2022, when growth reached 2.1 percent.

The rebound, though modest by global standards, marked progress for an economy long held back by power shortages and logistics bottlenecks. Seven of ten sectors grew, led by agriculture, which surged 17.4 percent. Trade, catering and accommodation rose 2.3 percent, finance increased 1.9 percent, and transport added 0.8 percent. 

Momentum improved toward year-end. In the fourth quarter, GDP rose 0.4 percent, beating both the previous quarter’s revised 0.3 percent gain and the 0.3 percent median forecast from economists surveyed by Bloomberg. Finance and trade were the main drivers, underscoring areas that continue to support activity despite structural challenges. Whether that fragile recovery holds may depend heavily on the path of oil prices — and on how long global tensions keep energy markets on edge.