Sasol becomes a big beneficiary of rise in crude, as deal in price war beckons

JOHANNESBURG – The shares of MTN Group and Sasol muscled higher on the JSE yesterday after the oil price gained the most in two weeks amid optimism that the bruising price war between Saudi Arabia and Russia could soon be resolved.

Brent crude oil prices surged to close 5.52percent higher at $26.95 (R485.62) a barrel after US President Donald Trump said that he was expecting a deal between Russia and Saudi Arabia to end the price war.

In intraday trade MTN’s shares jumped 16.59percent to R50.74 a share (closing at R49), while Sasol’s shares rose 13.01percent to R38.13 a share (closing at R41).

Lester Davids, trading desk analyst at Unum Capital, said Sasol was a direct beneficiary of a rising oil price.

“That being the underlying commodity, which is a large driver of its revenue and earnings”, he said. Sasol, whose cash break-even oil price is currently $35 a barrel, told investors last week that it had put hedges to cushion the impact of the weak oil environment and the uncertainty around the spread of the coronavirus.