Middle East Conflict Threatens To Derail South Africa’s Highest Business Confidence Levels Since 2015

SA business confidence hit a 10-year high in early 2026, but the U.S. war in Iran now threatens a R3/litre fuel hike and a reversal of interest rate cuts.

By: AXL Media

Published: Mar 5, 2026, 6:30 AM EST

Source: The information in this article was sourced from BusinessTech

Business Sentiment Hits Post-Pandemic High

Prior to the sudden eruption of international hostilities, South African business sentiment was on a clear upward trajectory. The BCI rose three points to 47 in 1Q26, placing it 20 points above the 2023 lows and six points above the long-term average. This optimism was fueled by the stability of the Government of National Unity (GNU), a positive State of the Nation Address (SONA), and a cooling inflation environment that had initiated a cycle of interest rate cuts. Macroeconomic indicators during the survey period (February 12–23) suggested that the economy was finally gaining sustainable momentum.

Geopolitical Shock: Operation Epic Fury

The positive domestic narrative was abruptly challenged on February 28, 2026, when the United States launched "Operation Epic Fury." The military action, which included the bombing of Iranian sites and the death of Iran's Supreme Leader, sent global markets into a tailspin. Locally, the impact was immediate: the rand, which had been performing strongly below R16.00/$, retreated to R16.30/$. While gold surged past $5,100 an ounce as a safe-haven asset, the rise in oil prices to $83 per barrel has created a new inflationary threat for South African consumers.

Fuel Price and Inflationary Pressures

The most immediate domestic consequence of the conflict is a massive under-recovery in fuel prices. Current data from the Central Energy Fund (CEF) suggests a looming petrol price hike of nearly R2.00 per litre for April, with diesel potentially rising by over R3.00 per litre. This energy shock threatens to reverse the progress made toward the South African Reserve Bank’s (SARB) 3% inflation target. Economists warn that if high oil prices persist, the Monetary Policy Committee (MPC) may be forced to abandon rate cuts in favor of hikes to stabilize the currency and dampen inflationary expectations.