South African motorists could soon see relief at the pumps after global oil prices dropped sharply in response to a temporary ceasefire in the Middle East.
Brent crude oil fell below $100 (R1629) a barrel late on Tuesday following the announcement of a two-week truce between Iran, the US and Israel.
By 11:20am, Brent was trading at around $93.92, a decline of about 14%, raising expectations of a potential fuel price cut in the coming weeks if the ceasefire is maintained.
Strait of Hormuz to reopen
The ceasefire includes an agreement to reopen the Strait of Hormuz, a critical shipping route that handles roughly 20% of global oil supplies.
Iran had blocked the strait on March 2 after US-Israeli attacks that killed its supreme leader, Ayatollah Ali Khamenei, triggering a surge in oil prices and heightened global economic uncertainty.
As tensions increased in March, oil prices spiked above $112 per barrel, pushing up fuel costs in South Africa.
In response, the National Treasury intervened with a R3 per litre relief measure by cutting the fuel levy. This resulted in a R6-billion shortfall in revenue for the month of April.
The reopening of the Strait of Hormuz is expected to stabilise supply and ease pressure on global energy markets. As part of the ceasefire, Iran is expected to allow transit to pass through the route and shipping movements would need to be coordinated with its armed forces.
Iran’s 10-point proposal
Iran also released the 10-point proposal based on the statement of the Supreme National Security Council. This included that all primary and secondary sanctions should be lifted, UN Security Council resolutions should be ended, US troops should be withdrawn from the region and Iran should be compensated, among other things.
“In this plan, America is fundamentally committed to guaranteeing non-aggression, the continuation of Iran’s control over the Strait of Hormuz, the acceptance of enrichment, the lifting of all primary and secondary sanctions, the termination of all resolutions of the Security Council and the Board of Governors, the payment of Iran’s damages, the withdrawal of US combat forces from the region, and the cessation of war on all fronts, including against the heroic Islamic Resistance of Lebanon.
“We congratulate all the people of Iran on this victory and emphasise that until the details of this victory are finalised, there remains a need for the steadfastness and prudence of officials and the maintenance of unity and solidarity among the Iranian people,” reads the statement.
- Brent crude oil prices dropped sharply below $100 per barrel, trading around $93.92, following a two-week ceasefire announcement between Iran, the US, and Israel.
- The ceasefire includes reopening the strategic Strait of Hormuz, which facilitates about 20% of global oil shipments and had been blocked by Iran in early March.
- Oil price spikes earlier in March, above $112 per barrel, led South Africa's National Treasury to reduce the fuel levy, resulting in a R6-billion revenue shortfall for April.
- The reopening of the Strait of Hormuz is expected to stabilize global oil supply and potentially enable fuel price reductions in South Africa if the truce holds.
- Iran's 10-point ceasefire proposal demands lifting all sanctions, ending UN Security Council resolutions, US troop withdrawal from the region, compensation for damages, and recognition of Iran's control over the Strait of Hormuz.
Brent crude oil fell below $100 (R1629) a barrel late on Tuesday following the announcement of a two-week truce between Iran, the US and Israel.
By 11:20am, Brent was trading at around $93.92, a decline of about 14%, raising expectations of a potential fuel price cut in the coming weeks if the ceasefire is maintained.
Iran had blocked the strait on March 2 after US-Israeli attacks that killed its supreme leader, Ayatollah Ali
As tensions increased in March, oil prices spiked above $112 per barrel, pushing up fuel costs in
In response, the National Treasury intervened with a R3 per litre relief measure by cutting the fuel levy.
Iran also released the 10-point proposal based on the statement of the Supreme National Security Council.
“In this plan, America is fundamentally committed to guaranteeing non-aggression, the continuation of Iran’s control over the Strait of Hormuz, the acceptance of enrichment, the lifting of all primary and secondary sanctions, the termination of all resolutions of the Security Council and the Board of Governors, the payment of Iran’s damages, the withdrawal of US combat forces from the region, and the cessation of war on all fronts, including against the heroic Islamic Resistance of Lebanon.
“We congratulate all the people of Iran on this victory and emphasise that until the details of this victory are finalised, there remains a need for the steadfastness and prudence of officials and the maintenance of unity and solidarity among the Iranian people,” reads the statement.
