What rise in prices mean for oil businesses and investors in SA

Following the recent tensions in the Middle East that have led to a surge in oil prices, investors are turning to safe havens like gold and palladium. This shift is believed to be positive for South Africa, a net oil importer. However, it raises questions about the country's dependence on oil imports and the potential for exploring alternative sources. Rajen Reddy, Executive Chairman of KZN OILS, joined CNBC Africa to discuss the implications of the rising oil prices on South Africa's economy. Reddy highlighted the volatile nature of the oil market and the political influences that can keep prices high. He emphasized the need for South Africa to diversify its sources of oil beyond traditional suppliers like Iran and consider options in Angola and Nigeria, despite challenges faced by those countries in their refinery operations. Reddy stressed the importance of negotiating fair supply deals to avoid being manipulated by global powers that impact oil prices. In addition to the direct impact of higher crude oil prices, Reddy also addressed the hidden costs and complexities involved in oil contracts during times of geopolitical tensions. He underscored the significance of government engagement with industry experts to navigate negotiations effectively and ensure transparency in oil transactions. Reddy called for a more informed approach to oil procurement to prevent excessive manipulation of prices and maintain economic stability. As South Africa grapples with the repercussions of elevated oil prices, the conversation with Reddy sheds light on the strategic considerations needed to safeguard the country's interests in the global oil market and mitigate the potential risks associated with geopolitical disruptions.