South Africa must not underestimate the potential negative economic and business implications that could yet unfold for many economies resulting from the US-Israel attack on Iran.

This is according to NWU Business School economist Prof Raymond Parsons, who states that the attack could have potential economic and business implications.

“Although it is still early days in the conflict, it is already evident that travel and tourism in the Middle East has been disrupted, with air flights having been cancelled on a large scale. The latest geopolitical developments have raised key questions about the future stability of the Middle East’s political economy. The biggest immediate impact for countries like South Africa will inevitably be the elevated uncertainty about global oil prices, and hence the prospect of higher fuel costs in the months ahead,” commented Parsons.

Prof. Parsons also added that these oil prices are widely expected to spike in the short-term and stay high for a period – depending on the outcome of the war and in the absence of any new supply measures to offset higher oil prices.

“Although the Organisation of Petroleum Exporters (OPEC) has undertaken to increase output soon, the bigger unknown factor is whether the navigation and transport of Iranian oil through the Homus strait will be disrupted by prevailing war conditions. There are conflicting reports about the latest status of the straits. The global oil price outlook therefore basically remains very uncertain in the highly volatile geopolitical circumstances now existing in the Middle East.”