Work-From-Home Could Make a Big Comeback as Fuel Prices Soar Amid Middle East War

While a COVID-like lockdown is not currently on the cards for South Africa, work-from-home may become the most viable solution to address record fuel price hikes.

This is according to Investec Chief Economist Annabel Bishop , who noted that it may become a broader short-term response to increased energy risks as the United States’ war in the Middle East drags on.

Market Volatility

In an economic note on Monday, Bishop said that market volatility has grown since the US and Israel launched their attacks on Iran at the end of February.

On 28 February , the United States and Israel launched military action against Iran under the banner of “Operation Epic Fury.”

The Strait of Hormuz a critical path for oil shipmentshas effectively been shut down.

The rand is currently trading at R17.21 to the dollar , depreciated 7.00% against the greenback since 27 Februarya day before the US attacks.

Fuel Prices Soar

Worries that the war is worsening are reflected in oil prices, which are back above US$116 a barrel.

Expected April fuel price hikes:

• Diesel: Up to R10/litre

• Petrol: Up to R6/litre

Fuel suppliers and retailers are already experiencing long queues and sporadic shortages.

The Work-From-Home Solution

Bishop said there is currently no expectation of a COVID-type lockdown, but an optional work-from-home environment is likely to develop.

“On a lengthening war, work from home is likely to be encouraged where possible.”

“The optional work from home environment, at least initially, on a longer war [would] reduce demand for fuel from commuters, while higher fuel prices will also reduce travel and so demand.”

IEA Recommendations

Bishop noted that the International Energy Agency (IEA) has recommended measures to reduce fuel demand, including:

• Working from home where possible

• Alternate vehicle access

• Reducing highway speed

• Reducing air travel

Economic Risks

While a strengthening in economic activity was expected for this year, markedly higher fuel prices place this at risk.

“Market concerns run over the energy intensity of economies, and South Africa is no different, with its supply chain diesel-intensive.”

The Bottom Line

Petrol up R6. Diesel up R10. The Strait of Hormuz is closed. The war drags on.

Work-from-home isn’t about productivity anymore. It’s about survival.

And it could be making a big comeback.

{Source: BusinessTech}

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