JOHANNESBURG, March 13 (Xinhua) -- South Africa's Road Freight Association (RFA) warned on Friday that escalating instability in major oil-producing regions is driving market volatility and threatening to disrupt global distribution and transportation routes.
In a statement addressing recent military escalations in the Middle East, RFA Chief Executive Officer Gavin Kelly said that South Africa's heavy reliance on imported crude and refined petroleum makes domestic fuel costs exceptionally sensitive to these geopolitical shifts.
"Political turmoil in key oil-producing nations has spiked market volatility, leading to fears of interruptions along major supply routes," Kelly said. "Oil markets typically react swiftly to geopolitical risks, pushing crude prices higher and driving up the cost of refined products downstream. For an oil-importing economy like South Africa, the result is inevitably higher domestic energy prices."
Kelly further explained that a weakening rand against the U.S. dollar is exacerbating costs at the pump, creating a ripple effect across the entire supply chain, as the cost of moving goods from agricultural and mining sites to manufacturing hubs, distribution centers, and retailers rises in tandem with input prices.
"Road freight logistics is the backbone of long-distance transport between ports, factories, and warehouses. All these sectors will feel the impact," Kelly added. "To remain financially viable, transport companies must now decide whether to hike their rates, passing on either the full fuel increase or a portion of it, or attempt to absorb the costs using their existing financial reserves."
The freight sector is extremely vulnerable to these fluctuations, and further fuel price increases are widely expected the coming April, Kelly said. ■