Time Series Modelling and Forecasting of Oil and Gas Prices in South Africa: Assessing the Impact of the COVID‐19 Pandemic

The study models the oil and gas price index in South Africa, quantifies the impact of the COVID‐19 pandemic on it, and forecasts monthly trends. The aim is to compare the projected oil and gas price index had the pandemic not occurred with the prevailing price index during the pandemic. The Box‐Jenkins methodology is used to construct a time‐series model to analyse oil and gas price index data and to develop a forecasting model. The Akaike Information Criterion (AIC) and Bayesian Information Criterion (BIC) confirm that Seasonal Autoregressive Integrated Moving Average (SARIMA) (1,0,0)(0,1,1) 12 with outliers is the best fit. The analysis shows a significant rise in oil and gas prices during the pandemic, exceeding standard expectations. This increase was due to supply disruptions and the weakening of the South African rand. The rise in oil prices was inflationary for South Africa’s import bill, driven by higher oil and petroleum product prices. The depreciating rand and COVID‐19 increased energy import costs, harming the energy sector and burdening consumers with higher transportation and household expenses, which strained economic activity. The findings provide insights into how the pandemic affected oil and gas prices in developing countries such as South Africa, informing policy development to mitigate future price shocks and secure long‐term energy security. The findings indicate that South Africa’s oil and gas prices are vulnerable to external factors, underscoring the need to diversify energy sources and promote renewable energy to reduce reliance on volatile markets.