Many African countries are only weeks away from fuel shortages, as larger and more powerful economies move ahead of them in the queue amid the war in the Middle East.
According to a Bloomberg report on Wednesday, the war has
sparked a scramble by African nations to secure new sources of petroleum,
putting strained budget and fragile economic recoveries at risk.
Bloomberg said although the Dangote refinery has ramped up
quickly after initial construction delays, it will not be able to fully replace
supplies from the Gulf, particularly after meeting its domestic obligations in
its Nigeria.
“The Persian Gulf was once a dependable, steady and
conveniently located fuel supplier to meet Africa’s steadily rising demand,”
the publication said.
“Most of the diesel that’s shipped out of the Strait of
Hormuz usually headed to the continent.
“The US-Israel strikes on Iran have changed all that —
effectively closing the crucial maritime chokepoint and leaving a gigantic fuel
hole for developing nations to fill.”
Bloomberg said countries in eastern and southern Africa
depend on the Middle East for three-quarters of their supply.
The report also highlighted Kenya’s vulnerability, noting
that it renewed contracts last year with major Gulf players Aramco, Adnoc, and
Enoc.
Compounding the challenging outlook, Bloomberg said numerous
refineries — from Mombasa and Lusaka to Durban and Limbe — have closed over the
past decade, reflecting a long-standing lack of investment.
“Several projects have been pitched in recent years to build
new capacity, but plants have remained closed. South Africa stands as the most
severe example, with domestic refining being cut in half,” the report said.
“Prices will soon be — or have already been — hiked, driving
inflation and setting back hopes of lower interest rates. Costs are set to
climb sharply when South Africa does its monthly adjustment in April — diesel
is seen spiking to a record — and there’s not much the Treasury can do about
it.”
The publication said smaller nations also face persistent
foreign-exchange shortages, which can delay fuel shipments, while investing in
strategic oil reserves remains a luxury that few governments can — or are
willing to — finance.
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