Plunging oil price ‘good news for SA’
Efficient Group economist Francois Stofberg believes the plunging international oil price could be good news for South Africa.
Oil prices plunged by almost a third Monday, the biggest drop since the 1991 Gulf War, as top exporter Saudi Arabia launched a price war after Russia blocked a bid to cut output.
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In ferocious trading, both main crude contracts nosedived following Riyadh's shock move to slash prices after the alliance between oil-exporting group OPEC and its partners fell apart.
At a meeting last week, Saudi Arabia led a push by OPEC ministers to reduce output to counter the impact of the coronavirus outbreak -- but it hinged on agreement from the group's allies, foremost among them Moscow.
"It is good news for an importing country of oil, it will relieve some pressure of our current account even taking to account the extreme depressive nature of the rand," says Stofberg.
Markets have been rattled by the threat of a price war between OPEC and Russia.
The wobble is compounding fears over the effect of coronavirus on the world economy.