South Africa's Treasury said on Wednesday it expected government debt to stabilise as planned despite surging oil prices and market volatility linked to the Middle East conflict, citing the potential offset from stronger export commodity prices.

Treasury's Director-General Duncan Pieterse highlighted that the broader impact of shifting commodity prices on South Africa's terms of trade and tax revenue was more significant than the oil price surge alone.

"From a core fiscal point of view, what is important is what this means for us in terms of trade," Pieterse said at an investment conference.

"As long as expenditure remains well anchored, which it is, and revenue either performs as it is performing currently or there is a slight over-performance, then from a fiscal perspective, our fiscal path is secured."

Fears of inflation

The remarks come as oil prices have surged past $100 a barrel amid the conflict, unsettling global markets and amplifying inflation fears for oil-importing nations like South Africa.

South Africa's rand currency has faced pressure in recent sessions, though it edged up against the US dollar on Wednesday as investors awaited key economic data for further clues on the health of Africa's largest economy.

Pieterse said higher oil prices could lift export earnings if they support coal and iron ore prices, helping miners and increasing corporate tax and royalty receipts. Treasury had already anticipated extra commodity-related revenue this year.

"It would take a very big shock to global growth to dislodge us from that path," Pieterse said.

Investors are 'overwhelmingly positive': Treasury

Pieterse described investor sentiment as "overwhelmingly positive" following the government's February budget, noting that some investors appreciated Treasury's conservative revenue assumptions amid growing global uncertainty.

The budget forecast that gross debt would stabilise this fiscal year before declining, and plans to introduce a fiscal anchor later in 2026.