Iran war with US, Israel is exposing Africa’s biggest economic weakness - Analyst

In Africa, the conflict is revealing a deep structural weakness, which is the continent’s heavy dependence on imported energy.

Oil prices have surged above $100 per barrel as military strikes, tanker attacks and the disruption of shipping through the Strait of Hormuz rattle global markets.

Global energy watchdog, the International Energy Agency (IEA), said on Thursday, March 12, the conflict has created the "largest supply disruption in the history of the global oil market", removing millions of barrels a day from the market.

The Strait of Hormuz alone normally carries about one-fifth of the world’s oil supply. With shipping traffic collapsing after Iranian retaliation and US-Israeli strikes, global energy markets have entered a period of extreme volatility.

For Africa, the consequences could be severe.

According to a Ghanaian financial analyst, Nelson Cudjoe Kuagbedzi, the biggest risk for African economies lies in the disruption of international supply chains.

“Okay, so I think the biggest risk has to do basically with the disruption in the international supply chains,” he told Global South. “Most of the goods and products that we use in Africa are imported, most especially petroleum products.”

That vulnerability is rooted in the structure of Africa’s energy sector. Despite producing crude oil, the continent lacks sufficient refining capacity and therefore imports much of the fuel it consumes.

In fact, Africa imports more than 70% of its refined petroleum products, leaving economies highly exposed to fluctuations in global oil markets.

Nelson says the continent’s limited production also makes it impossible to cushion the impact of a prolonged conflict.

“It is also important to know that the total crude output in Africa represents less than 10% of global crude output,” he explained.

The crisis also exposes another longstanding economic challenge of how Africa exports raw materials but imports many finished products.

“We haven't also developed our economies enough to the extent that we will use homegrown solutions to solve homegrown policies,” Kuagbedzi said.

“I mean, raw cocoa, raw gold, raw coffee, raw timber.”

For him, the war should serve as a wake-up call.

However, the Middle East remains the backbone of global oil supply. Many members of the Organisation of Petroleum Exporting Countries (OPEC) are located in the region, producing a significant share of the petroleum used worldwide.

According to Nelson, that concentration makes Africa particularly vulnerable.

“Most of the OPEC members that produce the chunk of the petroleum products, whether crude or refined, that we use in Africa, most of those OPEC members are in the Middle East,” he said.

With tanker traffic through the Strait of Hormuz disrupted and oil shipments stalled, markets are already reacting. Brent crude surged past $100 per barrel for the first time since the Ukraine war's energy shock.

If the crisis deepens, some analysts warn prices could climb much higher, intensifying inflation worldwide.