War on Iran: an opportunity for African oil producers

The US-Israel war on Iran and its impact on oil transport routes could benefit African oil producers, particularly Algeria, reports RFI on 3rd March.

Iran has announced the closure of the Strait of Hormuz between the Persian Gulf and the Gulf of Oman, that a large number of oil tankers cross every day to transport oil from Gulf countries to Asia and Europe. About a fifth of the world’s oil supplies goes through that route.

There are currently hundreds of ships and tankers stuck on both sides of the narrow strait, causing major disruption to oil markets and driving global prices up. As the conflict rages on across the Middle East, the situation is unlikely to be resolved soon.

On the other hand, Africa’s oil reserves remain safely accessible, despite ongoing conflicts in Sudan and Congo. The price rise will benefit African economies, and the Organization of the Petroleum Exporting Countries (OPEC) recently announced a rise of production quotas to 977,000 barrels per day. This has allowed Algeria, one of the key members, to adjust its crude oil production.

Algeria also benefits from its access to the Mediterranean sea and proximity of European and West Asian markets, and from its large network of oil and gas pipelines across its territory. Sonatrach, its state-owned oil and gas company, is a reliable and experienced institution with significant contracts with Italy and with China.

Other African members of OPEC, such as Nigeria, Angola, Libya, the Republic of the Congo, Equatorial Guinea and Gabon, will also likely see demand increase. The quality of African crude oil, particularly in Nigeria and Angola, also matches that of Iran, and in previous crises in the Middle East, importers had turned towards these countries to match demand.

While the current crisis is making oil and gas prices soar globally, to the detriment of consumers, there are opportunities for African countries to fill in the gaps and explore new markets.

RFI, The Independent, Maghrebi.org