Despite the defiant rhetoric from both sides, investors placed strong bets on Tuesday that Trump would call off his war ‌soon, before the unprecedented disruption it has caused to energy supplies causes a global economic meltdown, Reuters reports.

After he described the war as "very complete, pretty much", the bulk of Monday's historic surge in crude oil prices was reversed. Asian and European share prices staged a recovery on Tuesday from earlier precipitous falls.

But on the ground, there was no sign of any let-up. Tehran residents reached by Reuters described intense US-Israeli bombardment of the capital overnight as the fiercest of the war.

Iran has refused to bow to Trump's demand that it let the ​US choose its new leadership, naming hardliner Mojtaba Khamenei as supreme leader to replace his father, who was killed on the war's first day.

But Trump held a press conference on Monday that appeared to reassure markets he would stop his ​war before provoking an economic crisis like those that followed the Middle East oil shocks of the 1970s.

The war has effectively halted shipments through the Strait of Hormuz, where a fifth of global oil and liquefied natural gas normally passes ​along Iran's coast, and producers have run out of storage and stopped pumping.

And what about South Africa?

Because South Africa imports most of its crude oil and petroleum products, global oil prices quickly filter through to local petrol and diesel prices. A conflict affecting the Middle East, especially if it threatens shipping through the Strait of Hormuz, could therefore have noticeable economic effects.

Best case scenario:

In a limited conflict where oil production and shipping routes remain largely unaffected, the impact would likely be short lived. Global oil prices might rise modestly due to market uncertainty, but supply would continue flowing.

In this case crude prices could increase by roughly 5% to 10%, which might translate into South African fuel price increases of around 50c to R1 per litre. The broader economic impact would be limited, with only a slight uptick in inflation as transport and logistics costs rise marginally.

Moderate disruption:

If tensions escalate and shipping risks increase in the Gulf region, insurance costs and freight rates for tankers could rise sharply. Even without a full closure of the Strait of Hormuz, the market could react strongly.

Oil prices could climb to $100–$120 per barrel, potentially pushing South African petrol and diesel prices up by R2 to R4 per litre. Higher transport costs would feed through the economy, raising prices of food, manufactured goods and imported products. Inflation could increase noticeably, placing pressure on consumers and possibly delaying interest rate cuts.

Worst case scenario:

The most severe scenario would involve a major disruption to oil and petroleum exports through the Strait of Hormuz. Roughly one fifth of the world’s oil supply passes through the strait, and any prolonged closure would trigger a global supply shock.

Oil prices could surge well above $150 per barrel, potentially pushing local fuel prices up by R5 per litre or more. For South Africa the consequences could include:

• Sharp increases in transport and logistics costs
• Fulke shortages if supply chain is interrupted
• Higher food prices due to rising input and distribution costs
• Increased inflation across the economy
• Additional pressure on electricity generation costs where diesel is used for backup power
• Slower economic growth

The bottom line:

Even though only part of South Africa’s crude oil and refined petroleum supply comes directly from the Middle East, the country’s heavy reliance on imported fuels means that any major disruption to global oil markets would quickly translate into higher local fuel prices and broader inflationary pressure.

Additional reporting: US Energy Information Administration (World Oil Transit Chokepoints), International Energy Agency (Middle East energy market analysis), Goldman Sachs (Oil market modelling of Hormuz disruption) and Wood Mackenzie (Global oil supply disruption scenarios).

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