Global Oil Price Decline Creates Winners and Losers Across Africa
Global oil prices are heading for their sharpest weekly drop since March, slipping toward the $60-a-barrel mark as traders weigh rising supply, weakening demand, and ongoing geopolitical uncertainty. The decline is reshaping Africa’s economic outlook, easing import costs for some nations while tightening fiscal and currency conditions for others.
Oil prices are heading for their biggest losing streak since March, driven by oversupply concerns, rising U.S. inventories, and renewed trade tensions between the United States and China.
According to Reuters, Brent crude futures fell 48 cents, or 0.79%, to $60.58 a barrel at 07:20 GMT on Friday, while U.S. West Texas Intermediate (WTI) was down 44 cents, or 0.8%, at $57.02. Prices are on track for a 3% weekly loss and have dropped nearly 20% since January amid concerns of a global supply glut.
Also weighing on prices was the International Energy Agency’s (IEA) outlook for a growing supply glut in 2026. The U.S. Energy Information Administration (EIA) said on Thursday that U.S. crude inventories increased by 3.5 million barrels to 423.8 million barrels last week, compared with analysts’ expectations in a Reuters poll for a 288,000-barrel rise.
The sharper-than-anticipated rise in crude inventories was largely attributed to reduced refinery utilisation as plants entered seasonal maintenance cycles.
Data also showed a rise in U.S. production to 13.636 million barrels per day, the highest on record, underscoring the global oversupply concerns that continue to pressure prices, Reuters reported.
The IEA this week projected that the oil market could face an oversupply by 2026, while the EIA’s latest figures reinforced fears of excess production and sluggish demand recovery.
The market downturn comes as global geopolitical tensions continue to shape oil demand and sentiment.
U.S. President Donald Trump and Russian President Vladimir Putin are expected to meet again to discuss an end to the war in Ukraine, a potential inflection point for global energy markets.
In a related development, Trump said Indian Prime Minister Narendra Modi has agreed to halt India’s purchases of Russian oil, as Washington intensifies economic pressure on the Kremlin.
Trump told reporters he had received assurances from Modi that India would end the imports “within a short period of time,” calling it “a big stop.”
The United States has sought to leverage India’s reliance on Russian oil as part of its wider geopolitical strategy, though New Delhi has previously resisted such pressure, citing energy security and pricing advantages.
Meanwhile, renewed trade tensions between Washington and Beijing have fuelled concerns about slowing global growth and weakening energy demand, particularly as China tightens export controls on rare-earth minerals critical to advanced manufacturing.
For Africa’s major oil producers, including Nigeria, Angola, and Libya, the continued price slide poses significant fiscal challenges.
Most of these economies benchmark their budgets above $75 per barrel, leaving them vulnerable to revenue shortfalls, shrinking foreign reserves, and mounting exchange rate pressures.
In Nigeria, lower crude receipts have already weighed on the naira, which remains under pressure despite recent foreign exchange reforms. A prolonged slump in oil earnings could further limit the central bank’s capacity to defend the currency and fund import obligations.
Angola’s kwanza has also weakened amid reduced export inflows, while Libya’s fragile recovery continues to face headwinds from volatile production levels and domestic instability.
Oil-importing economies such as Kenya, Egypt, and South Africa could see short-term benefits from cheaper energy imports, though currency volatility and a stronger U.S. dollar are muting the gains.
The dollar’s appreciation continues to weigh on emerging market currencies, raising import costs in local terms.
In South Africa, a relatively stable rand has supported more favourable fuel price projections. Local industry estimates indicate potential fuel price cuts of up to 61 cents per litre for petrol and 29 cents for diesel in November, aided by sustained over-recoveries in global product pricing.
Weaker oil receipts are translating into reduced dollar inflows for exporters, intensifying exchange rate volatility across the continent.
As investors reassess African debt markets amid falling reserves and higher external financing costs, currency depreciation risks are expected to rise.
For oil-importing economies, the immediate benefit of lower prices could be offset by the stronger dollar, which raises import costs and inflation risks.
With Brent crude trading near $60, extended price weakness could compel several African governments to revise budget frameworks and tighten monetary policies to preserve fiscal stability in the months ahead.
