The paper utilised panel data analysis technique to assess the impact of oil prices on sectoral output in South Africa from 1994 to 2016. The paper, considered among other variables, sectoral output, oil prices, sector specific variables (such as intermediate input prices, real gross fixed capital formation, remuneration, unit labor cost and labor productivity) and macroeconomic variables (which include expenditure on health, interest rate and exchange rate). The fixed effect is the appropriate basic estimator as recommended by the Hausman test results. To cater for violation of the assumption of the linear panel regression assumptions (heteroscedasticity, serial and cross sectional correlation), the study employed the FGLG as the precise robust estimator following a large time (23) dimension and small cross sectional (3) units. The least square dummy variable was also used for sectoral analysis. The empirical findings of this paper demonstrates that the oil prices impact significantly on the South African economic sector output. More so, the results of the study illustrate that the impact of oil prices vary across economic sector outputs in South Africa. Thus, out of three selected economic sectors, only two sectors (the primary and tertiary) output respond negatively to oil prices. However, the paper postulates that the oil price is not a major obstruction of output growth in the secondary sector in South Africa.

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