By Rene Awambeng, Senior Executive Officer, Premier Invest
9 March 2026. The escalating conflict involving Iran has once again exposed Africa’s vulnerability to global commodity and logistics shocks. Brent crude pushing toward $120 per barrel, disruptions to tanker traffic through the Strait of Hormuz, and soaring war‑risk insurance costs have combined to deliver a powerful external shock to the continent. While oil‑exporting countries may briefly enjoy higher revenues, the overwhelming reality for most African economies—still heavily dependent on imported refined fuels, fertilizers, and food—is rising inflation, currency pressure, and deteriorating household welfare. Nowhere is this more acute than in the fragile economies of the Sahel.
A New Global Shockwave
Since late February, intensified attacks and threats near the Strait of Hormuz have forced major shipping lines and insurers to suspend or drastically reprice Gulf transits. War‑risk premiums have spiked, some by tenfold, and many vessels have diverted around the Cape of Good Hope, adding up to two weeks to Europe‑Asia routes. This has tightened the availability of fuel and refrigerated cargo space, further straining African supply chains.
The strategic chokepoint matters enormously: Hormuz routinely carries a fifth of the world’s crude oil and major LNG flows. Even partial interruptions reverberate through global energy markets, pushing up prices for oil, gas, fertilizers, and transport. African economies—already contending with slow disinflation—now confront renewed pressure on consumer prices, debt costs, and exchange rates.
Country Snapshots: How the Shock Lands Across Africa
The Sahel: Fragility Meets Rising Prices
In Burkina Faso, Mali and Niger, the combination of insecurity, political instability, and limited fiscal space heightens the danger. Fuel and food inflation, driven by imported cost spikes, risks triggering humanitarian crises and further undermining economic stability. The region has little buffer—and the shock comes at a moment of already strained donor relations.
Nigeria: An Oil Producer Still Exposed
Nigeria illustrates the paradox of an oil‑producing nation that nonetheless relies heavily on imported petroleum products.
- Fuel Prices: Petrol loading interruptions at the Dangote Refinery and successive ex‑depot price adjustments—from ₦774 to roughly ₦995 per litre—have cascaded into retail pump prices above ₦1,000 in many states.
- Supply Chain Strain: The NNPC is seeking additional crude cargoes to stabilize refinery feedstock, yet global benchmarks still dictate pricing.
- Budget Implications: While the 2026 budget is anchored on a conservative $60–65 per barrel oil price, the fiscal boost from higher crude values risks being offset by soaring import bills and FX pressures.
Angola: Higher Revenues, Higher Costs
Luanda welcomes stronger crude prices, but officials caution that higher import prices—particularly for food and essentials—may erode gains. With Brent well above the budgeted $61 per barrel, inflation risks are rising.
South Africa: Inflation Threat Re‑Emerges
As a major importer of crude and refined products, South Africa faces renewed pressure on regulated fuel prices. The oil surge threatens to delay expected interest‑rate cuts and intensify cost‑of‑living pressures through higher transport and food prices.
Pressure Points in the Petroleum Supply Chain
Africa’s refined‑product supply chain—already stretched—now faces:
- Longer voyages and higher insurance, lifting costs for petrol, diesel and jet fuel.
- Nigeria’s partial buffer, thanks to the Dangote Refinery, but a shortfall in local crude supply still forces costly imports.
- Rising shortage risks, as some insurers withdraw automatic war‑risk cover and traders tap West African floating storage to fill immediate diesel needs.
Food Security: A Second Shock in Motion
Fertilizer markets are deeply exposed to Gulf disruptions. A large share of globally traded urea originates from the region, and higher gas and shipping costs are raising prices alarmingly. For African farmers, this threatens the upcoming 2026/27 planting season.
Meanwhile, global carriers such as MSC, Maersk, CMA CGM and Hapag‑Lloyd have suspended or rerouted Gulf and Red Sea services. Emergency surcharges and schedule disruptions are raising the cost of food imports and increasing the risk of spoilage for perishable goods. Analysts warn that a prolonged disruption could destabilize food supply chains across low‑income, import‑dependent African states.
Budgets, Debt and the Fiscal Squeeze
Oil‑exporting countries—including Nigeria, Angola, Congo and Gabon—might see temporary revenue windfalls, but these will be offset by:
- Higher import costs for food, medicines and manufactured goods
- Rising debt‑servicing costs as currencies weaken
- Increased social‑spending pressures
For net importers such as Kenya, Tanzania, Ghana, Senegal and Rwanda, the picture is even more challenging. Rising fuel and freight costs will widen current‑account deficits, strain reserves, and complicate IMF program targets. The Sahel—already balancing fragility and fiscal stress—risks rapid deterioration.
Trade Finance and Liquidity: The Dollar Tightens
The oil‑price spike is tightening U.S. dollar liquidity across African banking systems.
- LC (Letter of Credit) confirmation costs are rising as banks price in geopolitical risk.
- Sanctions and war‑risk clauses slow documentary trade and increase compliance burdens.
- Withdrawal of automatic war‑risk cover around the Gulf forces buyers into higher‑cost, case‑by‑case insurance—often unaffordable for smaller African importers.
Paradoxically, this environment is bringing LCs back to the forefront as vital tools for securing essential imports of fuel, fertilizer and food.
Inflation and Rising Living Costs
The impact on households will be substantial.
- Fuel inflation passes quickly into transport fares, electricity generation, milling, and cold‑chain logistics.
- Food inflation follows with a lag: higher fertilizer, freight and storage costs eventually drive up staple prices.
- Macroeconomic risks are rising, despite earlier IMF projections of gradual global disinflation.
For millions of African families, this means higher market prices, falling purchasing power, and tougher financial decisions.
Nigeria’s Domestic Refining Puzzle
The Dangote Refinery now plays a central role in shaping domestic fuel prices. Yet:
- It remains tied to global crude prices and foreign‑exchange conditions.
- Loading pauses typically reflect adjustments to replacement costs, not supply breakdowns.
- Stable crude allocations and pricing frameworks are essential to calm volatility.
The removal of subsidies means consumers feel the shock more immediately than in the past.
Three Scenarios for the Months Ahead
1. Prolonged Disruption
Brent averages $100–120; Cape rerouting continues.
African importers face 2–5 percentage‑point spikes in fuel inflation, worsening current‑account deficits and raising food insecurity in fragile states.
African importers face 2–5 percentage‑point spikes in fuel inflation, worsening current‑account deficits and raising food insecurity in fragile states.
2. Partial Stabilization
Brent settles at $85–100; some insurers and carriers return on adjusted terms.
Inflation remains elevated but more manageable with targeted fiscal and liquidity support.
Inflation remains elevated but more manageable with targeted fiscal and liquidity support.
3. Rapid De‑Escalation
Brent retreats toward $70–80 as tensions ease.
CPI and FX pressures soften, but the shock’s confidence damage lingers.
CPI and FX pressures soften, but the shock’s confidence damage lingers.
Policy and Corporate Priorities: What Must Be Done Now
For Governments and Central Banks
- Update budgets using stress cases at $90, $110 and $120 oil.
- Expand FX‑backed trade‑finance lines through Afreximbank and DFIs.
- Deploy targeted social support instead of generalized fuel subsidies.
For Energy and Logistics Agencies
- Formalize crude‑to‑refinery supply agreements to stabilize output.
- Diversify routes and lock in war‑risk cover in advance.
- Use strategic stock releases to cushion immediate shortfalls.
For Agribusiness and Food Importers
- Hedge fertilizer and grain purchases.
- Secure reefer capacity early and diversify entry ports.
For Banks and Corporates
- Re‑price trade contracts to account for higher LC and freight costs.
- Review covenants and working‑capital cycles in light of extended shipping times.
Why the Sahel Requires Urgent Focus
The convergence of security crises, donor fatigue, and rising import prices creates a combustible mix. Without swift intervention—food and fuel support, fertilizer programs, and protected transport corridors—the region risks deepening instability. Over the medium term, expanding renewable energy, mini‑grids and climate‑resilient infrastructure can reduce chronic import dependence.
What This Means for Infrastructure and Energy Transition Sectors
Transport infrastructure will face higher bunker costs, schedule volatility, and longer shipping cycles—pressuring PPPs and corridor economics. In energy, the crisis underscores the value of domestic refining, reliable gas generation, and accelerated investment in solar, wind and storage—critical buffers against external shocks.
Africa has weathered oil shocks before, but the continent’s exposure remains stark. The current crisis is a reminder that resilience—whether through diversified energy systems, stronger logistics networks, or deeper trade‑finance capacity—is not optional. It is the foundation of economic security in an increasingly turbulent world.
About René Awambeng
René Awambeng is a Cameroonian investment banker and the founder of Premier Invest. With more than thirty years of experience in international finance, he has held senior leadership positions at Afreximbank and within the Ecobank Group before launching his investment platform aimed at connecting international capital with strategic projects across Africa.
