Nothing lifts an oil-and-coal share quite like a fresh war premium, and Sasol is proving the point. Since US President Donald Trump declared the ceasefire “over” on 8 July, the stock has rallied, adding 2.6% to R188.21 on Friday, while Thungela, the pure-play coal miner spun out of Anglo American in 2021, gained 12.5% over the week. Last month's memorandum of understanding between the two sides, which had sent a sigh of relief through energy markets, has seemingly collapsed, and traders have re-priced fast.
Oil does the heavy lifting
The engine behind the move is crude, and for a company that turns coal and gas into fuel, a higher oil price flatters the whole business. Brent topped $85 a barrel on Friday for the first time in over a month, capping its biggest weekly gain since April. By Monday the escalation had pushed Brent above $90, up 2.4% to $90.18, while US crude rose 2.1% to around $84, as a ninth straight day of US attacks on Iran, which struck back at targets across the region, rattled shipping through the Strait of Hormuz. Just a handful of ships made the crossing on Sunday, and Tehran claimed to have hit two of them.
The sting in the tail
Higher oil is good news for Sasol but awkward for almost everyone else. The same spike has pressured the rand, which hit R16.57 to the dollar early on Monday before settling around R16.47 by mid-morning, weaker than the R16.23 it traded at over the weekend. And it has raised the odds of another interest-rate hike. The Reserve Bank's rate-setting committee is likely to lift rates when it meets on 23 July to prevent inflation from becoming entrenched, analysts say, with another precautionary 25 basis-point increase now firmly on the table as oil prices climb on the renewed Middle East conflict.
For now the war premium cuts both ways: a windfall for energy shares like Sasol and Thungela, and a headache for households facing a weaker rand and the prospect of dearer money. The 23 July meeting is where the second half of that trade gets tested.
