Nigeria, Angola, Ghana set to gain from rising oil prices — Report

Nigeria, Angola and Ghana are expected to strengthen their current account balances as global oil prices climb amid escalating tensions involving the United States, Israel and Iran, according to a new report by Bloomberg Economics.

The report, released on Thursday, indicated that while the surge in oil prices could benefit the three oil-producing economies, most other countries in sub-Saharan Africa may face economic strain from the development.

Bloomberg Economics economist, Yvonne Mhango, said higher crude prices would improve the external balances of oil-exporting countries in the region if the current trend persists.

“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,” Mhango said.

According to the report, rising oil prices are likely to weaken currencies and increase inflationary pressure across many African economies, potentially forcing central banks to reconsider tighter monetary policies.

“For most African economies, higher oil prices mean weaker currencies and renewed inflationary pressure, which could put rate hikes back on the table,” Mhango added.

The publication noted that inflation is expected to be the most significant economic risk facing many countries on the continent as fuel costs rise.

Using data from South Africa’s Central Energy Fund, Bloomberg Economics said fuel prices in the country are expected to increase in April, while financial markets have begun pricing in the possibility of an interest-rate hike later in the month.

The report added that South Africa’s current account balance could decline by about one percent of its gross domestic product due to the oil price surge.

In contrast, Angola stands to benefit significantly from higher crude prices, with Bloomberg Economics estimating that the country’s current account balance could improve by as much as 3.3 percent of GDP.

Nigeria is also projected to benefit not only from crude oil exports but from refined petroleum products.

According to the report, increased refining capacity in Nigeria could further boost export earnings.

“Nigerian billionaire Aliko Dangote this week raised the prospect of sending more product from his 650,000 barrel-a-day oil refinery to Europe — if the price is right,” the publication said.

Bloomberg Economics also warned that South Africa’s fuel supply could face additional pressure if India and Oman — two of its major suppliers — reduce exports.

Global oil prices have risen sharply in recent days. Brent crude climbed to about $85 per barrel on March 3, up from $72 on February 28, reflecting market concerns over potential disruptions to supply linked to the ongoing geopolitical tensions in the Middle East.