Energy price surge from war on Iran tests Africa’s importers and rewards exporters

A sharp escalation in conflict involving Iran has sent global energy prices sharply higher. It is creating complex spill-over effects for African economies, with implications for inflation, trade costs, and fiscal balances across the continent.

The escalation, triggered by coordinated US‑Israeli strikes on Iranian military and political targets in late February, has already pushed crude benchmarks higher and disrupted shipping through the Strait of Hormuz, one of the world’s most critical energy corridors.

Benchmark Brent crude futures rallied for a third consecutive session on Tuesday, rising to more than $80 a barrel, as broadening hostilities in the Middle East heightened concerns about supply disruptions in a key hydrocarbon exporting region.

The conflict has seen attacks on energy infrastructure and tanker traffic near the Strait of Hormuz, through which roughly 20% of the world’s oil and liquefied natural gas flow. Analysts warned the disruptions could keep prices elevated for months, with scenarios under which Brent climbs toward $120-$150 per barrel if the conflict persists.

The conflict has already forced the closure of key energy facilities in Saudi Arabia and Qatar and prompted major shippers to avoid the narrow waterway between Iran and Oman, with at least three tankers reported damaged over the weekend.

Analysts at Wood Mackenzie and JPMorgan told Reuters that crude flows through the strait had fallen to about 4 million barrels per day from a normal 16 million, while tanker bookings have largely dried up.

In Europe, central bankers have cautioned that sustained energy price rises could feed into broader inflation dynamics. Philip Lane, chief economist at the European Central Bank, said a prolonged conflict could push up inflation and weigh on growth — a prospect that would have knock-on effects for global demand.

Immediate impact on prices and markets

The oil price surge was one of the most striking early signals of the crisis’s reach. In late February, before the conflict intensified, markets were already pricing in some geopolitical risk, with Brent trading near six-month highs. But since air strikes and counter-attacks widened, prices have jumped by double-digit percentages. At one point Brent briefly traded up more than 13%, touching levels unseen since early 2025.

West Texas Intermediate crude also climbed sharply, indicating that the rise was not confined to a single benchmark. The immediate upward pressure has been accompanied by increased volatility in equity markets and a flight to traditional safe havens such as gold, reflecting broader investor unease.

In the United States, analysts reported that retail gasoline prices were rising toward $3 a gallon for the first time in months, underscoring how crude market tensions feed quickly into consumer energy costs.

Short-term pressures on African economies

For Africa, the most immediate effect has come through energy and import costs. Most sub-Saharan economies are net importers of refined fuels; a sustained rise in crude prices tends to ripple through to domestic petroleum products, transport costs and broader consumer prices.

“Upswings in global oil prices and weakening exchange rates amid heightened demand for safe-haven assets may drive short-term inflationary risks higher,” said Brendon Verster, senior economist at Oxford Economics, in a research note on regional impacts. Higher oil prices would also benefit Africa’s oil exporters, he added, but importers would face a contractionary cost shock.

Countries such as Nigeria, Angola and Algeria are likely to see immediate increases in export revenues if elevated prices persist, in contrast to regional fuel importers whose economic growth could be dampened by higher energy bills and inflationary pressures.

African currencies have already shown stress in foreign exchange markets, a common reaction when global risk aversion rises and capital flows toward safe assets. The stronger U.S. dollar tends to make dollar-denominated imports more expensive for emerging economies, compounding inflation pressures.

Medium-term risks and opportunities

Over the next 12-24 months, the trajectory of oil and gas prices will influence fiscal positions, current account balances and inflation outlooks across Africa. Exporting nations could see a boost in government revenues that might ease budget deficits or strengthen foreign reserves, provided that higher prices are sustained and well managed.

Conversely, import-dependent economies such as Kenya, Ethiopia and Morocco face wider current account deficits and tighter monetary conditions as central banks react to imported inflation. Supply chain disruptions and higher freight costs resulting from changes to shipping routes are an additional headwind.

The crisis is also testing policy frameworks. Countries with fuel subsidies may face widening fiscal deficits if authorities try to smooth the pass-through effects of higher global prices to consumers.

Longer-term structural impacts

In the longer term, some African economies could attract greater foreign investment if global strategies shift to diversify energy sources and secure alternatives to Middle Eastern supplies. Large gas fields off the coasts of Mozambique and Senegal have the potential to become more strategically important, as liquefied natural gas demand grows and supply chains diversify.

Mineral-rich nations may also benefit indirectly. A broad shift toward alternative energy technologies — including electric vehicles and renewable power — would increase demand for minerals such as cobalt, lithium and manganese. However, analysts caution that realisation of such opportunities hinges on improvements in infrastructure, regulatory certainty and the global economic backdrop.

Market participants are watching closely for signs of de-escalation or further escalation, with short-term price forecasts still unsettled. Some analysts expect Brent to remain elevated in the $80–$90 a barrel range, while others warn that continued strife around shipping chokepoints could push prices toward $100 per barrel or more in scenarios of prolonged disruption.

Until there is clarity on the conflict’s trajectory, African policymakers are likely to face a delicate balancing act between mitigating inflationary pressures at home and capitalising on export windfalls abroad.

OPA News