Higher oil prices triggered by the ongoing U.S.-Israeli attacks on Iran, coupled with a sharp decline in the value of its currency, are changing South Africa's economic trajectory, putting the country's fragile economic outlook under fresh threat.
Brent crude oil prices are up at least 20 percent since U.S.-Israeli air strikes began on February 28, while the South African rand has weakened by over 4 percent in the last week.
"Price rise comes through into your inflation number because we now have a new inflation target of 3 percent with a 1-percent leeway either side. We probably will breach that 1-percent leeway and that would cause the reserve bank to possibly be forced to raise interest rates even though that's not the right thing to do when you have a supply shock, but it might have to do it because it's establishing a new inflation target," said Viv Govender, a portfolio manager at Rand Swiss.
"South Africa being the net importer of oil and fuel, we know that most of our refineries have closed down. We don't have enough capacity in terms of refining. Even if we did we still need oil to be shipped through the Strait of Hormuz which is almost non-functional. So that's going to have a negative impact. We're going to have to import this oil at a higher price and also import fuel at a very high price," explained Maudi Lentsoane, an independent economist.
Rising oil prices have already started to filter into South Africa’s economy.
"Fuel prices affect every individual. For those commuting with public transport and personal transport, having to fork out an extra cent is quite steep based on the question of inflation that we are encountering in the country," said Olebogeng Lephoi, a resident.
Fuel price hikes feed directly into transport, food and logistics costs, placing renewed pressure on households already struggling with elevated living costs.
For businesses, especially in agriculture, mining and freight, an energy price spike could erode margins and delay investment decisions.
"We are not that far above zero. We have 1.5 to 2 percent growth targets for the next year. I think every 10-dollar oil price increase results in a 0.3-dollar reduction in GDP growth. That really puts us into negative economic growth, so we could be in a recession and this won't just affect us, it will be Europe, it will be the whole world as well," said Govender.
Soaring oil prices put South Africa's economy under pressure
China's first 500-kV cross-border alternating-current power interconnection project entered service Monday, creating the highest voltage grid tie between the two countries and advancing Belt and Road energy cooperation.
The project raises two-way power transfer capacity between the two countries from 50,000 kW to 1.5 million kW, enabling the annual transmission of about 3 billion kWh of clean electricity, roughly 30 times the capacity of previous lines, according to China Southern Power Grid.
As the largest cross-border grid project and the highest-voltage power link between China and Laos, it connects southwest China's Yunnan Province with Oudomxay and Luang Namtha provinces in northern Laos.
Cross-border electricity trading began as the project entered operation. About 4.81 million kWh of power from clean energy bases in northern Laos was transmitted to Yunnan through the new line, marking a more regular and institutionalized phase of power connectivity between the two countries.
It is also the first time an overseas new energy project has participated in China's electricity market, the company said. The power involved in the transaction came from a large mountain photovoltaic project in Laos, one of the core supporting power sources for the interconnection line.
"This project is the cross-border power grid project with the highest voltage level between China and Laos. Leveraging the China-Laos power grid interconnection and the power markets in southern China, surplus hydropower from Laos can be transmitted to China during the rainy season, while China can supply supplemental power to northern Laos during the dry season. This project represents yet another landmark achievement between China and Laos in deepening power cooperation and jointly advancing the high-quality development of the Belt and Road Initiative," said Li Jingru, general manager of Electricite du Laos Transmission Company Limited (EDL-T), a joint venture of China Southern Power Grid and Lao state-run Electricite du Laos.
The solar project has an average annual power generation capacity of about 1.65 billion kWh. In 2026, it is expected to transmit about 1.1 billion kWh of solar power across the border, supporting energy complementarity between the two countries.
"In the future, efforts will be made to further promote normalized cross-border electricity trading, meet the trading needs such as electricity transmission from Laos to China's Yunnan, from China's Yunnan to Laos, and from Laos to China's Guangdong, and facilitate the optimal allocation of energy resources in the Lancang-Mekong region," said Li Minhong, marketing director of China Southern Power Grid.
Construction of the interconnection project began in late February last year. Spanning a total length of 177.5 km, the transmission line includes a 145-km Chinese section and a 32.5-km Lao section.
New China-Laos power link expands transfer capacity 30-fold, boosts electricity trading
