How will the “wild card” war in Iran affect South Africa’s markets and economy? Head of South African Macroeconomic Research at Standard Bank Group Dr Elna Moolman unpacks key insights on the impact of the Middle East conflict on South Africans. 

The war has roiled global markets, with the JSE plunging 9.2% in the first week of March, virtually wiping out its year-to-date 2026 gains – erasing roughly R2 trillion from the bourse's overall market capitalisation. 

Oil prices also soared, hitting a high of around $119.50 a barrel on 9 March, the highest intra-day levels for both Brent and West Texas Intermediate crude since June 2022.

What can South Africa expect?

Fuel prices

Moolman says the biggest impact from the war will be spiking oil prices. “This would naturally be inflationary and will adversely impact real spending power and economic growth,” she says.

Speaking to Moneyweb recently, Stanlib chief economist Kevin Lings calculated that, at a global oil price of $120, South Africa’s under-recovery in the petrol price would “jump to around R5.40/l and R10/l for diesel”. 

“At $100 a barrel, the petrol price under-recovery is around R4.50/l and diesel about R8.30/l,” says Lings. 

Under-recovery is the amount by which fuel prices fall short of the cost of importation or production. If these figures materialise, it will mean an even sharper fuel price increase in April, if oil stays at current levels and rand weakness continues.

The calculations exclude the inflation-linked increases in fuel levies announced in the 2026 budget in February, which come into effect in April.

Flight fares

Jet fuel prices have also increased from around $85–$90 per barrel to $150–$200 per barrel, prompting many global airlines to increase fares in response.

Locally, Jet A1 fuel prices rocketed in a single week, with hikes of up to 70% reported at two of South Africa’s three major airports – Cape Town International Airport and King Shaka International Airport. OR Tambo International is expected to see similar adjustments.

Local airlines FlySafair and Airlink joined international counterparts in applying fuel surcharges. National carrier South African Airways also announced that it would be adjusting airfares after initially stating that it was monitoring developments.  

Food prices

Higher oil prices are also a concern for farmers. Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa, says the South African agricultural sector may be entering a period of high input costs.

“The agricultural sector is exposed to the possibility of fuel price increases as we enter the winter crop planting period and the harvesting of citrus and summer grains. These are both high-fuel-use periods,” he explains.  

He adds that the other aspect to watch closely is fertiliser prices, as the Middle East is a substantial producer. These prices have started creeping up as the war has shut down production in the region and disrupted shipping routes due to the closure of the Strait of Hormuz.  

These higher input costs could be passed on to consumers.

Inflation

Moolman says inflation forecasts have been modestly lifted, mainly to reflect higher near-term oil prices. “At spot levels of the exchange rate and oil prices, inflation might spike to around 5% in April and possibly May, depending on how the war unfolds.”

She adds that once the oil price spike unwinds after the war, there should be strong, favourable base effects that should curb inflation.  

“If oil prices and the rand recover within the next month or two, this inflation spike could be short-lived, with inflation still retreating towards the new 3% target before 4Q26, depending on the exact trajectories of the exchange rate and oil prices.”

There is, however, still potential for further upside risk in the interim. “The inflationary impact of the Iran war on South Africa should remain relatively contained as long as the rand remains reasonably resilient, which may prove the case given support from elevated precious metals prices,” she explains.

Interest rates

Moolman says interest rate cuts will likely be delayed given the inflationary impact of the war-induced spike in oil prices.

In a recent interview on The Property Pod, Standard Bank Group chief economist Goolam Ballim said the South African Reserve Bank (SARB) will likely “address the situation through hyperactive monitoring”.  

He said the central bank has room to pause and assess the situation, particularly as inflation remains relatively low and within its target range.

“If the inflation spike proves to be a once-off and doesn’t translate into secondary inflation – meaning it doesn’t meaningfully elevate inflation expectations or disturb the wage market – then a pause with deferred interest rate cuts is something I would entertain.”

The SARB will also take some comfort from the real policy rate still being high, Moolman says.

Could the Reserve Bank make a surprise pivot and hike rates? Ballim said a rate hike would be the next move only if there are lingering inflation concerns. “However, given that we don't know how long the war will last, I don't think the Reserve Bank is going to be ushered into a reflex panic and instantly raise interest rates.”

Moolman says Standard Bank still forecasts a cumulative 75 basis points of cuts this cycle, “likely at a pace of 25 basis points at every second meeting”.

“At this stage, we pencil in the next interest rate cut at the May Monetary Policy Committee meeting. The feasibility of a rate cut then would largely depend on how quickly the war ends.”

Economic growth

Standard Bank reports that South Africa’s real GDP growth is expected to be 1.5% in 2026 and 1.8% in 2027.

“We preserve our economic growth forecasts for now, which were slightly conservative before the war. There is downside risk to our growth forecasts if the war proves protracted. At this stage, our forecasts incorporate a short-lived war,” Moolman says.

According to Standard Bank economists, a sustained rise in oil prices could trim South Africa’s economic growth by about 20 basis points for every $10 increase in crude.

Watch these Worldwide Markets episodes for more information about the impact of the conflict on SA and the markets: 

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