The price of oil reached a new record high today with the price of a single barrel rising to $113.66. The price of oil has risen by close to 18% since the beginning of this year and has been hovering just above the $100 mark for most of the time. The two major reasons for the rising oil prices is that most investors are now investing in commodities and oil seems to be a commodity they are investing quite a lot in. The second reason is that the US dollar continues to weaken. A weak dollar tends to raise prices for commodities denominated in that currency by boosting non-US spending power and by attracting investors seeking an inflation hedge. Investors will continue to invest in commodities for as long as there is volatility in the stock markets.

From a South Africa perspective, these rising oil prices can not be helping us. If world oil prices rise, chances are that the price of fuel in South Africa will also rise. Some analysts are predicting a further 20 cent increase in the price of fuel in the coming months. It may not be a surprise if we hit the R10 a litre mark very soon. And there is not much we can do in South Africa as we have no say over the world oil prices. Maybe the oil producing countries should start producing more oil to help counter this increased demand in oil. But that in itself is another huge talking point as OPEC said that the current supply of 32 million barrels are year is sufficient.

Subscribe

Sign-up to receive the latest updates from TheRandToday.com direct to your mailbox

Loading ...