Here comes the energy squeeze

9 March 2026 — Will the oil price hit $100 per barrel? Why is the rand under pressure? Is China’s geopolitical strategy at a crossroads? How are global ANC allies being placed under pressure? Will Ambassador Bozell’s charm offensive prove effective?

Here comes the energy squeeze

Over the last two weeks, the price of Brent crude oil shot up from $71 per barrel on 25 February to $94 per barrel on 6 March, representing an increase of over 30% and pushing the oil price to its highest mark since September 2023.

Container and tanker ships quickly ceased traversing the Strait of Hormuz after conflict broke out between the United States (US), Israel, and Iran, with Gulf Cooperation Council countries such as Saudi Arabia, Qatar, and the United Arab Emirates being drawn in. As a result, 7 to 11 million barrels of oil per day are temporarily missing from global supply.

Constrained global oil supplies and the resulting higher prices are expected to drive up petrol, diesel, and petroleum product prices in April. How severe the jump will be, and whether it continues into April, will depend on the length and intensity of the conflict.

Stanlib estimates that petrol and diesel prices could increase between R2 and R5 a litre, based on current calculations. Bloomberg’s chief geoeconomics analyst, Jenny Welsh, considers it possible the oil price could reach $108 per barrel. In this scenario the price of petrol in South Africa would increase by R8, meaning inland petrol prices would exceed R28 per litre, based on the March 2026 prices.

In addition, domestic fuel tax increases are set to be implemented from 1 April. The 2026 National Budget presented by finance minister, Enoch Godongwana, provided for an increase in the general fuel levy of 9c per litre for petrol and 8c per litre for diesel, plus an increase in the carbon fuel levy of 5c per litre for petrol and 6c per litre for diesel, plus an increase in the Road Accident Fund levy of 7c per litre.

Combined, these government levies will then constitute R6.54 per litre of the petrol price and R6.41 per litre of the diesel price.

The rand looking shaky

Also, over the last two weeks, the South African rand weakened by 4.5% against the US dollar, moving from R15.85 on 25 February to R16.56 at close of business on 6 March. The primary trigger was the escalation of conflict in the Middle East, particularly the US-Israel military strikes on Iran since 28 February, followed by Iranian retaliatory missile and drone attacks across the region.

This has led to heightened global risk aversion, as investors have fled riskier assets like emerging market currencies — including the South African rand — toward safe havens such as the dollar. This classic “risk-off” move has sucked capital out of South Africa and other emerging markets, pushing the dollar higher broadly.

Positive local developments in South Africa, such as low inflation and a credible budget, have been overwhelmed by the geopolitical shock. Prolonged uncertainty, if it is sustained, will keep up pressure on the rand and lead to higher inflation, as well as making imported fuel more expensive.

China at the crossroads

US President Donald Trump and the Chinese leader, Xi Jinping, are scheduled to meet between 31 March and 2 April.

Mr Trump will arrive having intervened militarily in two of China’s key allies: Venezuela and Iran. Mr Xi will arrive having just concluded the Two Sessions, China’s annual parliamentary gathering, where his government set a 2026 growth target of 4.5% to 5%, the lowest since 1991. Domestic demand remains weak following the post-Covid hangover, and a property sector credit crunch continues to drag on the economy.

For South Africa, the key risk is China’s growth trajectory. The commodity super-cycle of the 2000s was built on Chinese manufacturing expansion. If China’s domestic economy continues to struggle, the recent upswing in gold and platinum prices, from which South Africa has benefitted, may prove shorter and shallower than hoped.

ANC allies are tottering

The geopolitical ground is shifting rapidly and undermining many long-held beliefs of African National Congress (ANC) foreign policy. Its faith in the international rules-based order, its support for multipolarity, its belief in its own moral superiority and its ability to credibly claim a non-aligned posture for South Africa are all being shaken at the same time as many of its most cherished revolutionary and anti-imperialist allies are being greatly weakened.

BRICS has been shown to be a toothless tiger, as detailed in a recent CRA client note. Venezuela was brought under US direction through the removal of its titular leader, Nicolás Maduro, in January. Cuba is under a US-led energy blockade that has led to days-long electricity outages and reports of anti-government protests.

Iran is currently under attack, and the US is likely eventually to take control of the Strait of Hormuz, which will put it in a position where it can credibly threaten to restrict energy flows, including to geopolitical rivals like China. China’s oil import dependency is around 70% of consumption, with about half of that coming from Gulf countries that rely on the Strait of Hormuz for export.

South Africa’s ANC-led foreign relations establishment has so far made no adjustments to these rapidly shifting global power balances and continues to take actions that seem designed to provoke the US.

Last Wednesday, South Africa co-chaired an emergency meeting of The Hague Group, an anti-Israeli coalition of states, in the Netherlands. On Thursday, Nomvula Mokonyane, the first deputy secretary-general of the ANC, led a delegation to the Iranian Embassy in Pretoria to sign the condolence book in honour of Iran’s Supreme Leader Ayatollah Ali Khamenei, who was killed in a US-Israeli military strike in late February.

During the same visit, she urged the people of Iran to “stand up and defend themselves against injustices,” in reference to  US and Israeli military actions against Iran. She criticised the strikes as violations of sovereignty and called for resistance, positioning the ANC in solidarity with Iran against what she described as external aggression.

Her actions are being viewed as supportive of Iran at a time when the US is actively engaged in military actions against it, potentially alienating the US, including in US congressional reviews of bilateral relations.

Good cop, bad cop

The new US ambassador to South Africa, Leo Brent Bozell III, confirmed this week what the CRA noted in its Client Note of 27 February: he arrives with an America First perspective, and he wants Pretoria to respond in kind.

In an interview with News24, Mr Bozell said that when both countries lead with their own national interests, “we can start looking at what the opportunities are for our nations, and then what’s getting in the way.” He added that the clearest positive signal Pretoria could send Washington would be to shift its relationship with Iran. He did not spell out what that would look like in practice.

Mr Bozell is, by all accounts, a personable and constructive interlocutor. Pretoria should not mistake that for a change in Washington’s underlying position. The Trump administration’s approach to South Africa remains transactional and unsentimental: performance matters, solidarity rhetoric does not.

The ANC's reflexive instinct, to double down on old alliances and issue statements of revolutionary solidarity, is precisely what Washington is watching, and precisely what it finds wanting. The opportunity for South Africa to improve the relationship exists, but whether Pretoria has the political will to use it is another matter entirely.