Home » Business » Oil prices plunge: consequences in Africa

Oil prices plunge: consequences in Africa

Published on :

On Wednesday March 11, Saudi Arabia decided to increase production by an additional 2.5 million barrels a day. The United Arab Emirates followed suit with an additional 1 million barrels. A war of volumes and prices with Russia which accelerates the plunge in oil prices caused by the coronavirus. With consequences, already, in Africa, in producing countries.

Will Russia and Saudi Arabia continue their price war or not? In any event, the price decline triggered by the coronavirus is already having an impact in Africa. Nigeria has lost half of its oil revenues since January. The leading producer on the continent, it is on the brink of its second recession in four years. ” The federal cabinet has met urgently to review the country’s budget. This budget was built on a barrel at 57 dollars, which was then reasonable, judge Mouhamadou Ly, economist at the Policy Center for the New South, lessons were still close to $ 70 at the start of the year. But they are now less than 35 dollars.

Read also : Riyadh and Moscow engage in an oil war against a background of coronavirus

On the brink of recession, Nigeria increases production

To compensate for the shortfall, the Abuja authorities have already decided to increase production volumes in turn beyond 2.2 million barrels per day, which was impossible in 2014 due to the unrest in the Delta. And too bad if it floods the oil market even more, even though ten shipments of Nigerian crude have not found a buyer and will have to be sold at a discount.

The second largest African producer, Angola, which is highly dependent on the Chinese market, has already had to resell its oil at low prices. As for Ghana, it expected nearly $ 9 billion in revenue. Accra will also have to make budgetary adjustments, but austerity will probably be postponed until early 2021, after the elections.

Also to listen: Faced with the coronavirus, the breakdown of the OPEC + alliance causes an oil crash

Senegal: the Sangomar project spared?

What will become of the new oil investments in Africa, is that the other question? Given the losses on the stock market by the oil majors, offshore projects, which require very heavy financing, could be put under bell, from South Africa to Mozambique.

In Senegal, on the other hand, ” the Sangomar project does not cause concern, observes Mouhamadou Ly. The crisis has spared the consortium firms that develop this maritime field, they are not in debt and production is not expected before 2023 Which gives the oil market time to recover. ” The biggest concern in Senegal is that of consumer associations who demand, after this fall in prices, a drop in prices at the pump.

Also to listen: Between exports and local consumption, how Senegal intends to use its gas

.

Leave a Comment