Report: Oil shock squeezes Africa but rerouted shipping offers limited gains to some

Africa is beginning to feel the economic strain of the conflict in the Middle East, though some countries are seeing temporary gains as global shipping routes shift, according to a new joint report by the African Union and the African Development Bank.

It warns that the disruption, already visible in fuel and food markets, could deepen if the conflict drags on.

Oil prices have risen by about 50 per cent since late March, while currencies in 29 African countries have weakened, raising the cost of imports and external debt servicing.

The report says the shock could “quickly turn into a cost‑of‑living crisis across Africa through higher fuel and food prices, rising shipping and insurance costs, as well as exchange rate pressures, and tighter fiscal conditions.”

But the rerouting of global trade is also creating pockets of opportunity for a few countries.

“While the conflict is generating broad economic risks for Africa, a few countries may see short‑term gains through higher commodity prices, trade diversion, and rerouted logistics,” the report notes.

Nigeria is expected to benefit from higher oil prices and increased exports from the Dangote Refinery.

Mozambique could see renewed momentum in LNG and rising traffic through the Port of Maputo. Ports in Durban, Walvis Bay and Mauritius are also handling more vessels as ships divert around the Cape of Good Hope, lifting port activity and bunkering services.

In East Africa, Kenya is emerging as a logistics node through Lamu Port and Nairobi, while Ethiopia is benefiting from its role as an emergency air bridge linking Asia, Africa and Europe through Ethiopian Airlines.

“These gains, however, are likely to be uneven and may not offset the wider inflationary, fiscal, and food‑security pressures affecting the continent,” the report cautions.

The broader risk is a slowdown in growth. If the conflict lasts beyond six months, Africa’s GDP growth could fall by 0.2 percentage points in 2026.

The Middle East accounts for 15.8 per cent of Africa’s imports and 10.9 per cent of its exports, while the Strait of Hormuz handles roughly a fifth of global oil shipments.

Fertiliser supply is another concern. The brief warns that disruptions to Gulf LNG could constrain ammonia and urea production during the March‑to‑May planting season, “putting further upward pressure on food prices and hitting vulnerable households hardest.”

The report calls for early, coordinated action to cushion the shock. Governments are urged to strengthen tax administration, broaden the revenue base and deepen domestic capital markets, while expanding the use of instruments such as diaspora bonds and blended finance.

It also recommends activating contingency import financing, diversifying fertiliser sourcing where possible and deploying targeted social protection measures.

“Concomitantly, Africa must accelerate the reform of its financial architecture… to mobilize development finance on a greater scale,” the brief says.

Central banks are encouraged to adopt flexible monetary and exchange‑rate policies and curb foreign‑exchange speculation during periods of depreciation.

For One Planet Agency | OPA News Agency