Nigeria has been identified as one of the winners of an oil windfall following the US and Israel’s war on Iran.
According to Bloomberg Economics, the rise in prices will improve the current account balance of just three sub-Saharan African economies.
Bloomberg Economics’ Ms Yvonne Mhango wrote in a report on Thursday that if oil stays at about $85 a barrel, Angola, Nigeria and Ghana will see their current account balance improve, while the Democratic Republic of Congo, South Africa and Kenya will be among the worst-hit.
“For most African economies, higher oil prices mean weaker currencies and renewed inflationary pressure, which could put rate hikes back on the table,” she said.
According to the analyst, Nigeria, which is Africa’s largest oil producer, will not only gain from crude sales but from fuel exports.
Bloomberg Economics data showed that Nigeria’s current account balance could benefit by as much as 2.3 per cent of gross domestic product (GDP), second only to Angola’s 3.3 per cent and Ghana’s 0.2 per cent.
Already, the 650,000-barrel-a-day Dangote oil refinery has raised the prospect of sending more product to Europe if the price is right.
Dangote is offering up to 44,000 metric tons of jet fuel for loading March 20-22, as well as at least 40,000 tons of gasoil with a maximum sulphur content of 50 parts per million for loading March 15-30.
However, countries like Africa’s largest economy – South Africa – may face challenges if India and Oman, two of its biggest fuel suppliers, cut down on exports. It may see a -1.0 per cent hit to its current account balance.
South African consumers are bracing for fuel costs to increase in April, according to Central Energy Fund data, while traders moved to price in a chance of an interest-rate hike later this month.
Following US and Israeli strikes on Iran over the weekend and retaliatory moves by the Islamic Republic, global crude prices have adjusted sharply.
The Strait of Hormuz, a narrow shipping lane between Iran and Oman, through which roughly a fifth of global oil supply normally passes, has been blocked completely by Iran.
As of press time, Brent crude, which Nigeria prices its crudes is trading up at 2.3 per cent at $83.23. Nigerian crude grades, Brass River and Qua Iboe, are selling at $87 per barrel.