Renewed US-Iran conflict threatens higher oil prices – SABC News

The recent failed talks between the United States (US) and Iran have rattled the markets, following the recent outbreak of hostilities between the two countries over the Strait of Hormuz.

Market analysts say the renewed conflict will see oil prices rise, gold become unaffordable, and the Rand weaken.

At the opening of the markets on Monday morning, Brent crude oil rose by 4% to $79.12 per barrel from $76.24 per barrel at the close of the local market on Friday.

The re-closure of the Strait of Hormuz will see oil prices go up. On Monday morning, Brent crude oil rose by four per cent. This is due to the recent shocks where energy shipments via ​the Strait of Hormuz remain under threat.

This is bad news for both consumers and businesses, as this will mean digging deeper into their pockets for transportation.

This comes just weeks after consumers were starting to enjoy some relief at the fuel pumps this month. But, Market analysts say the renewed conflict will not only impact oil prices but also gold prices and a weaker Rand, among other things.

Mmakwe Masilela, market analyst at Makwe fund managers says, “a flare up in the us-iran conflict is causing the likes of oil to go up because that makes the strait of formation to be closed so that affects oil prices then it’s a question of supply and also it makes the likes of the us dollar to strengthen because we started increasing bets that the us will increase interest rates come the 29th of july and in an environment where you see interest rates going up or being elevated that has a negative impact when it comes to our bonds and gold which are traditional haven assets.”

Investec Chief Economist, Annabel Bishop, says the financial markets are concerned as the situation remains uncertain.

She says, “While the US dollar has seen some strength in the rest of the periods, causing the rand to weaken, the oil price is now higher again. This is both negative for global economic growth and, of course for inflation as well via interest rates. Looking forward, the situation is uncertain, and this level of risk has concerned financial markets and caused weakness in the indicators.

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