Surging oil prices triggered by the war in Iran are rippling through African economies, threatening higher fuel costs, rising inflation and renewed pressure on currencies across the continent – with no relief in sight after Iran named a new hardline supreme leader and oil briefly spiked to nearly $120 a barrel.
Brent crude surged as high as about $119.50 a barrel early on Monday before pulling back to around $108, after Iran’s Assembly of Experts confirmed Mojtaba Khamenei – son of the late Ayatollah Ali Khamenei, who was killed in the war’s opening salvo on February 28 – as the country’s new leader.
Analysts warn he is likely to pursue the war more aggressively than his father, deepening uncertainty over Middle Eastern oil supply. Iran’s stranglehold on the Strait of Hormuz has already all but halted tanker traffic through the corridor, through which roughly a fifth of the world’s oil passes each day.
For Africa, which imports most of the petroleum products it consumes, the consequences are significant.
“Africa is a net importer of oil products, meaning it is heavily exposed to shocks like these,” said Nick Hedley, an energy transition research analyst at Zero Carbon Analytics.
When global oil supplies tighten, he said, prices rise while African currencies often weaken as investors move funds into safe-haven assets such as the US dollar – a combination that amplifies the impact of price spikes in import-dependent markets such as Kenya and Ghana.
Weaker currencies
A similar dynamic unfolded after Russia’s full-scale invasion of Ukraine in 2022, when rising crude prices and a weaker currency pushed transport fuel prices in South Africa up by more than 25% within six months.
“The near-term risks come mainly from rising oil prices and weakening exchange rates as investors move to safe-haven assets,” said Brendon Verster, senior economist at Oxford Economics.
The impact of higher oil prices across Africa will be uneven. Countries such as Kenya and Uganda say their supplies remain stable even as they work to ensure continuity. Nigeria and Ghana produce crude oil but import most of their refined petroleum products, limiting the benefits of higher global prices.
“It’s difficult to say at this point whether they will see net gains,” Hedley said. “Oil producers could benefit from higher crude prices, but ordinary citizens will likely face higher transport and fuel costs, and potentially higher interest rates.”
Sustained high prices could nonetheless deliver a windfall for Africa’s major oil exporters. Verster noted that Nigeria exports roughly 1.5-million barrels of oil a day and has based its medium-term fiscal framework on oil prices of between $64 and $66 a barrel through 2028. Prices above $100 a barrel, if sustained, would significantly boost revenues for exporters including Angola, Algeria and Libya.
For most African households, however, the immediate effect is likely to be sharply higher living costs. “This is a serious concern,” Hedley said, noting that most food and goods across Africa are transported by road. “Rising fuel costs therefore feed quickly into broader inflation and reduce household purchasing power.”
Long-term energy security
Peter Attard Montalto, managing director at advisory firm Krutham, said the crisis was testing African economies, though the impact had so far been contained in more resilient markets.
“So far the impact has really been muted for countries like South Africa,” he said, noting that recent economic reforms had helped stabilise the country’s currency and bond markets. “Still, higher oil and gas prices are expected to filter into inflation in the coming months.”
Countries already operating under IMF programmes could face additional strain as energy import bills drain scarce foreign exchange reserves. Among the most vulnerable, analysts warn, are Sudan, The Gambia, the Central African Republic, Lesotho and Zimbabwe.
Over the longer term, analysts say the crisis may reinforce calls for African nations to diversify their energy systems and reduce dependence on imported fuels.
“It makes strategic sense for African countries to ensure long-term energy security and sovereignty,” said Kennedy Mbeva, a research associate at the Centre for the Study of Existential Risk at the University of Cambridge. Achieving that, he said, will require balancing short-term fiscal pressures with long-term investment in clean energy and green industrialisation.
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