With oil prices increasing on a global scale, it’s evident that there might be a shortage of the fossil fuel approaching.
Here’s what we know so far.
Nigerian fuel crisis
Nigeria is facing a fuel crisis, but why? With Nigeria having 5 oil refineries and only one of which is currently operating, this means a small amount of fuel can be generated and sold compared to the previous amounts that would be available. Even if all these refineries were in operation, they would only then supply a quarter of the country with what they need.
To keep up with its demands, the national oil company imports half of its fuel, then the remainder is imported by private fuel firms.
Nigeria’s fuel crisis is due to several factors including large outstanding debts to fuel distributors, currency depreciation, and fuel subsidy disputes.
Doubling oil prices in Sudan
Sudan’s fuel prices have almost doubled after the lifting of fuel subsidies from economic reforms. This has seen the price of a litre of gas to rise from 150 to 290 Sudanese pounds, and a litre of diesel is up almost 128%.
This is causing many people to struggle to afford gas, making things like long-distance travel and running machinery much more difficult and less available to the average person. Multiple protests regarding the high costs of living have happened during the past year.
However, according to Tickmill, there might be a potential drop in oil prices ahead.
They say that “The price of American index S&P500 keeps moving along the level of 4200.00. Hence, the asset’s price might correct itself and drop soon.”
Why some African nations would face serious difficulties if oil exploration was stopped
As of the end of last year, Angola was set to lose the title of one of the ‘Least Developed Countries’, however Covid-19 has delayed that progression. Angola is one of the most oil-dependent countries in the world and it’s been stuck in a recession for six years, meaning that the costs of oil keep on mounting up against this country.
Angola reached a crisis when the pandemic hit and took away the demand for oil. With this decreased demand, Angola faced another year of oil production decline on top of the already existing 5 years. Prior to this, Angola was the top producer of oil in Africa but now its production rate has dropped to less than it was 15 years ago.
Without the demand for oil, countries like Angola will face an even larger struggle to stay afloat and shake off the LDC nametag.