Shares in Sasol surged more than 16% on Friday, making the chemicals and energy company the top performer on the JSE as the escalating military conflict in the Middle East boosted oil prices.
Friday’s gains added more than R10bn to Sasol’s present market value of just more than R94bn.
The group’s gains were powered by oil prices, with Brent crude rising to about $73 a barrel, the highest level since July last year, amid fears of supply disruptions after military strikes involving the US, Israel and Iran escalated.
Oil markets have reacted strongly to the intensifying conflict, with traders pricing in the risk of reduced supply from one of the world’s most strategically important oil-producing regions.
According to Trading Economics, oil prices are expected to rise further when markets reopen, reflecting mounting concerns that escalating hostilities could disrupt global energy flows.
The Middle East accounts for almost a third of global oil production, and Iran’s geographic position makes it especially influential. The country borders the Strait of Hormuz, a narrow shipping route through which about 20% of global daily oil consumption passes. Any disruption to that route could trigger a sharp and sustained increase in oil prices.
Iran has repeatedly threatened to block the strait in response to sanctions and military pressure, raising the risk premium embedded in oil prices. Al Jazeera reported that the US sanctions reimposed in 2018 sharply reduced Iran’s oil exports, cutting volumes by 60%-80%, and intensifying tensions over energy supply and regional influence.
The surge in oil prices directly benefits Sasol, whose earnings are closely linked to energy markets. Higher oil prices typically improve margins for fuel and chemical producers, boosting profitability and investor expectations.
Sasol plays a central role in South Africa’s energy and industrial economy. A study by the Trade & Industrial Policy Strategies (TIPS), an independent, nonprofit, economic research institution, estimates the company contributed about 1.2% to the country’s GDP directly in 2024, rising to as much as 5.23% when broader economic impacts are included.
The group, which employs about 28,000 people worldwide, supplies about 30% of South Africa’s total liquid fuel needs. Fuel output at its Natref refinery is forecast to increase by as much as 10% in the 12 months to end June thanks to improved operations.
Unlike traditional oil majors, Sasol’s business model is based primarily on converting coal and gas into fuel and chemical products. However, global oil prices remain a key benchmark influencing its fuel pricing, revenues and profitability.
The latest geopolitical developments have intensified fears of broader regional instability. US and Israeli forces launched widespread strikes targeting military and strategic sites across Iran at the weekend, prompting retaliatory missile and drone attacks on US and allied positions across the Gulf region.
Iranian state media also reported the death of Ayatollah Ali Khamenei after the strikes, though the situation remains fluid and difficult to verify independently.
The military action has already disrupted air travel across the region, with airspace closures and widespread flight cancellations, underscoring the scale of the crisis.
Sasol’s strong share price rally reflects its sensitivity to oil price movements and its position as one of the largest energy producers on the African continent.
Trading Economics forecasts Sasol’s share price could remain elevated in the near term, projecting a level of about 14,140 by the end of the current quarter, though future performance will depend heavily on oil price trends and geopolitical developments.
“Looking ahead, we forecast Sasol to be priced at 14,140.12 by the end of this quarter and at 13,029.43 in one year, according to Trading Economics global macro model projections and analysts’ expectations,” it said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.