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.
In large part, this is because of a slowdown in demand growth. The International Energy Agency said last week that the pace of growth in demand was at its slowest since the global financial crisis more than a decade ago. This is hardly because of a surge in demand for electric vehicles. It is, rather, a big red flag about the outlook for the global economy.Oil demand growth estimates have already been cut back sharply.
Broadly, this is good news for South Africa. Lower oil prices can help to reduce business costs while curbing inflation, which in turn could boost prospects for further interest rate cuts. It also frees up disposable income that can be spent on other things aside from petrol at the pumps.