Russia’s invasion of Ukraine, and the sanctions that followed, has pushed the price of oil to over $100 per barrel, the highest level in eight years. But, it’s also opened an opportunity for African oil producers like Nigeria, Angola, Libya, and Algeria to cash in with more crude oil exports. But a lack of refineries in Africa means crude oil exporters will also have to pay more for imported fuels.
The Brent crude oil prices hit $105 per barrel last week, it’s highest mark since 2014 and up by 47% since December, amid fears that supplies from Russia may be impacted by crisis.
Russia accounts for a significant amount of the world’s total crude oil output between 25-30% making it the second highest producer globally.
But experts say the crisis and sanctions slammed on Russia by Europe and America could significantly impact demand for Russian products and tip the odds in Africa’s favor.
“For Africa it’s a gain, it’s an opportunity, it presents that window of opportunity for African countries to see how they can increase their production capacity and meet the need of global demands of crude oil,” says Isaac Botti, a public finance expert.
However, Africa’s production combined accounts for less than a tenth of total global output. Nigeria is Africa’s largest producer of oil followed by Libya. Other notable producers are Algeria and Angola.
Experts predict oil prices will rise further but worry Nigeria could be facing a backlash.
“At the end of the day it’s going to hit on our economy. We may think that we’ll gain but remember we don’t refine out crude oil,” said economic analyst Paul Enyim.
Nigerian refineries have been shut down for about one year. The country depends on imports to meet it’s energy needs. Experts say prices paid for imported will also increase.
Authorities are also grappling with huge subsidies to keep pump price of oil products within affordable limits.
Last week Nigeria’s minister of state for Petroleum said authorities were not comfortable with the surge in prices of crude oil.
But this week, Algerian state-owned oil and gas giant said it would supply Europe if Russian exports dwindled as a result of the crisis.
Botti says it’s a good example for other African nations.
“We need to develop our capacity to produce locally, we need to look at various trade agreements that are existing,” he said.
For years African oil producers including Nigeria have been struggling to meet required daily output levels.
Experts however worry African producers may struggle to fit into the big market with increasing global demands for crude oil.
For weeks, Nigeria has been battling to normalize fuel supply in the country after authorities recalled millions of liters of adulterated petrol from circulation causing a major shortage in West Africa’s most populous nation.
As the crises between Russia and Ukraine lingers, experts say the shifting focus on Africa could be both a blessing and a burden.