The Iran war has clouded the outlook for a South African economy that had entered its longest period of economic expansion since 2018, the country’s central bank said.

“The buoyant performance of global and domestic financial markets over the past year was abruptly interrupted following the outbreak of the war,” the South African Reserve Bank said in its quarterly bulletin on Tuesday.

The subsequent rise in oil prices “is expected to exert significant upside pressure on domestic fuel prices in the coming months.”

The bank held its benchmark interest rate steady at 6.75% last week, but cautioned a prolonged conflict in the Persian Gulf may warrant hikes in coming months, with the scale of the policy response hinging on how long hostilities last.

Oil prices have surged more than 55% since the US and Israel attacked Iran on February 28.

The central bank, whose quarterly bulletin mainly examined South Africa’s economic performance through the fourth quarter, said the impact of the conflict has yet to become apparent in the real economy