In this Saturday, Sept. 14, 2019 file photo, made from a video broadcast on the Saudi-owned Al-Arabiya satellite news channel, smoke from a fire at the Abqaiq oil processing facility fills the skyline, in Buqyaq, Saudi Arabia. The weekend drone attack on one of the world’s largest crude oil processing plants that dramatically cut into global oil supplies is the most visible sign yet of how Aramco’s stability and security is directly linked to that of its owner -- the Saudi government and its ruling family. (Al-Arabiya via AP, File)

CAPE TOWN – Hopes for fuel-price relief next month and a cut in interest rates fizzled on Monday after drone attacks on Saudi Arabia’s second-biggest oil refinery knocked out 5 percent of the world’s oil supply.

South Africa receives 40 percent of its crude oil from Saudi Arabia. Analysts warned that the attacks might pose a risk to the country's oil supply and force the South African Reserve Bank (Sarb) to put cutting interest rates on hold. 

The Central Energy Fund last week predicted a decline of 11 cents per litre in the price of unleaded 95 octane petrol in October, and for 93 octane petrol to decline by 24 cents, while the price of diesel was already expected to have increased 11 cents per litre.

But the Brent crude oil price – a benchmark in the government's determination of local fuel prices – surged almost 20 percent to above $71 (R1 039) a barrel yesterday morning. 

The price fell to about $66 per barrel later in the day, but was still 10 percent up on the day. 

Sasol saw its stock strengthening 7.23 percent to R298.94 on Monday afternoon.

Neil Wilson, the chief markets analyst for, said in a statement the attacks could signal higher oil prices over the longer term, as a risk premium would need to be built in for Saudi Arabia, once considered one of the most consistent suppliers.

“An outage in global production of this level has not been seen since Iraq invaded Kuwait in 1990,” said Wilson.

“The implications of these attacks are far-reaching and lasting, going well beyond the immediate disruption to albeit a very large portion of global output. It is a material escalation in the risks to supply. Traders now worry Saudi Arabian oil production can be swiftly and easily knocked out, which goes against everything we’ve come to expect for the last 50 years.”

Tomorrow, Statistics South Africa is expected to release its inflation data for August, with the market anticipating it to remain below the central bank's mid-point target range despite a marginal uptick in food prices.

On Thursday, the Sarb will announce its decision on interest rates.

Wilson said the destabilisation of global energy markets would raise very real concerns about the Saudi Aramco initial public offering. 

“It’s going to add a massive risk premium to crude prices, so it will likely materially drive prices higher for a while,” he said.

The Automobile Association of South Africa (AA) said the attacks would have a negative impact on local fuel prices at the end of the month.

However, the association said it was hard to predict which way the rand-dollar exchange rate might go for the rest of the month, and whether oil prices would continue to remain high.

The AA said it had intended to publish a petrol price a forecast yesterday, but had postponed it until today to obtain a better picture following the drone attacks.

“This weekend's drone attacks on Saudi oil facilities mark a major setback to the global geopolitical landscape,” said Taimur Baig, the chief economist at DBS Bank. 

“Even if supply disruptions can be fixed in the near term, or due to a release of global inventories, higher oil prices are a risk to disinflationary developments and possibly to the fiscal situation in South Africa,” Société Générale analyst Marek Drimal said, according to a report from ANA.