Brent crude oil prices were within a whisker of hitting $120 a barrel earlier on Thursday. The sharp rise in prices has been driven by the Russia/Ukraine conflict and general supply concerns. And with concerns around how long the conflict will continue for and, even escalate, there are real worries about what this means for the South African economy. Households and individuals will have to rethink how they use their limited resources.
The price of oil has been steadily rising over the last number of months. But in recent weeks, it has shot up to a seven-year-high on the back of the Russia/Ukraine conflict situation. The Organisation of the Petroleum Exporting Countries didn’t help matters yesterday, by deciding not to pump any further barrels of oil to make up for the anticipated shortfall out of Russia which accounts for 11% of global oil supply.
South African households and businesses are not only having to deal with higher prices at the pump, there’s also the higher electricity price coming into effect from April for Eskom customers, and July for municipal customers. These increases will hit, particularly the poor, very hard. South Africans are being advised to rethink how they use their limited finances.
When it comes to managing the ever-rising fuel price increases, people may have to look at sharing the transport load. The price pressures infiltrating South African consumers’ pockets will translate in higher inflation. There’s a worry that the Reserve Bank’s hand may be forced in keeping with what’s happening globally, to raise interest rates more aggressively which would be a decisive blow to a nation already struggling to cope with everyday living.
VIDEO: Russia-Ukraine – Oil prices surge with the possibility of breaching $120 a barrel
