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South Africa: Global Oil Demand Growth Slows in Double-Edged Sword for SA As Trade War Heats Up

Last week, the International Energy Agency (IEA) said growth in the demand for oil had braked to its slowest pace since the global financial crisis of 2008. US President Donald Trump’s reckless pursuit of a trade war with China is partly to blame for this reversal in oil’s bull run, which will also set back US economic growth. For South Africa’s vulnerable economy, this is a double-edged sword.

South African consumers should perhaps be thankful to the current occupant of the White House. Donald Trump has triggered a trade war with China and in the process mounting concerns about global economic growth have brought oil prices down. This should translate into lower South African pump prices in coming months, if the rand manages to hold its own.

The price of crude oil has swung wildly over the past year. In October 2018, it was fetching around $86 a barrel. It then fell to below $55 before rebounding, reaching over $75 in April. It is now below $59, a loss of more than 20% since its 2019 highs in April, and it looks as if the bottom of the barrel has not been reached.

In large part, this is because of…

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