South Africa has been urged not to downplay the potential economic fallout from the escalating military confrontation between the United States, Israel and Iran, as fears mount over energy security and global market stability.
An economist at the North-West University Business School, Raymond Parsons, has cautioned that the ripple effects of the US-Israel strikes on Iran could yet carry significant consequences for open economies such as South Africa.
The conflict has intensified following large-scale strikes by the United States and Israel targeting Iran’s military infrastructure and missile capabilities, aimed at curbing Tehran’s nuclear ambitions. Iran has reportedly retaliated with waves of missiles and drones directed at Israel, as well as US bases and allied interests in parts of the Gulf, including Saudi Arabia, Qatar, the United Arab Emirates, Kuwait and Bahrain.
Parsons said that although the situation remains fluid, early signs of disruption are already visible. “It is still early days in the conflict, but travel and tourism across the Middle East have been affected, with widespread flight cancellations. These geopolitical developments raise serious questions about the stability of the region’s political economy,” he said.
He warned that the most immediate risk for South Africa would likely stem from heightened volatility in global oil markets. Oil prices, he noted, are widely expected to spike in the short term and could remain elevated depending on how the conflict unfolds and whether additional supply measures are introduced to counterbalance potential disruptions.
While the Organization of the Petroleum Exporting Countries (OPEC) has indicated plans to increase output, Parsons pointed to uncertainty surrounding the movement of Iranian crude through the Strait of Hormuz as a key risk factor. The narrow waterway is a critical artery for global energy supplies, and any sustained disruption could tighten markets further.
“There are conflicting reports about the status of shipping through the strait. In these highly volatile geopolitical circumstances, the outlook for global oil prices remains deeply uncertain,” Parsons said.
Currency strategist Andre Cilliers of TreasuryONE added that markets were grappling not only with military developments but also with political uncertainty within Iran. Reports that Iran’s Supreme Leader, Ali Khamenei, may have been killed have fuelled speculation about possible instability in Tehran and the direction of future leadership.
Cilliers said energy markets were reacting sharply to concerns over shipping risks in the Strait of Hormuz. Even where official statements suggest the route remains open, tanker operators and traders have reportedly exercised caution amid fears of attacks, effectively slowing traffic through the corridor.
Given that roughly a fifth of global oil supply passes through the strait, any prolonged disruption could trigger sustained price increases, with knock-on effects for inflation and fuel costs worldwide. Although OPEC+ producers have signalled higher production quotas, analysts say additional supply would offer limited relief if safe maritime routes are not assured.
Market sentiment has shifted towards risk aversion, with investors closely monitoring whether diplomatic channels reopen or whether the conflict broadens further. The difference, analysts note, could determine whether the current oil price spike proves temporary or evolves into a more severe global energy shock.
Safe-haven demand has also resurfaced, with gold prices climbing amid heightened uncertainty. Emerging market currencies, including the rand, have come under pressure as global investors reassess exposure to riskier assets.
For South Africa, the implications are clear: sustained higher oil prices would feed directly into domestic fuel costs, transport expenses and broader inflationary pressures, potentially complicating the country’s already fragile economic recovery.
