JOHANNESBURG, March 12 (Reuters) - The South African rand weakened early on Thursday as escalating Middle East tensions and surging oil prices stoked inflation fears and dampened risk appetite ahead of key domestic data.
* At 0653 GMT the rand traded at 16.5625 against the dollar,roughly down 0.4% from Wednesday's close. * The local currency has been under pressure recently,shedding more than 3% last week, pressured by rising oil pricesthat pose a challenge for South Africa as a net energy importer. * Iran said the world should brace for $200-a-barrel oilafter its forces struck merchant ships on Wednesday, while theInternational Energy Agency urged a massive release of strategicreserves to blunt one of the worst oil shocks since the 1970s. * Oil prices rose over $100 a barrel, adding to inflationpressures, as Iran stepped up attacks on oil and transportfacilities across the Middle East. * "For now, the key thing investors are watching is whetherthe Strait of Hormuz reopens - because that will likelydetermine whether oil prices settle down or continue climbing,"said Wichard Cilliers, head of market risk at TreasuryONE. * Cilliers added that the rand "will remain volatile" untilthere is clarity on the duration and scale of the conflict. * The South African Reserve Bank will publish fourth-quartercurrent account data at 0900 GMT. * Statistics South Africa will then release the Januarymining output at 0930 GMT and manufacturing production data at1100 GMT. * South Africa's benchmark 2035 government bond was weakerin early deals, as the yield rose 13.5 basis points to 8.61%.(Reporting by Sfundo Parakozov; Editing by Janane Venkatraman)
