Oil at $85 boosts Nigeria, Angola but pressures South Africa’s economy

As Brent crude moves closer to $85 per barrel, the impact is already being felt across Africa’s biggest economies. For oil exporters such as Nigeria and Angola, the rise offers a welcome boost through stronger export revenue and improved external balances. For South Africa, the same increase is likely to push up fuel costs, add to inflation and weigh on an economy that relies heavily on imported energy.

Brent crude futures climbed more than 3 percent toward $84 a barrel on Thursday, approaching their highest level since July 2024. The move follows growing supply concerns tied to tensions in the Middle East. China has ordered major refiners to halt exports of diesel and gasoline as uncertainty grows around the Persian Gulf, tightening supplies in a market already sensitive to geopolitical risk.

Investors are closely watching developments around Iran and the wider regional conflict, particularly the risk of disruptions to shipping through the Strait of Hormuz, one of the world’s most important oil routes. Proposals such as vessel insurance and naval escorts have so far done little to calm the market. At the same time, the U.S. Energy Information Administration said crude inventories rose by 3.5 million barrels to 439.3 million barrels, a larger-than-expected increase that offers some buffer against potential supply disruptions.

Higher oil lifts exporters, hits importers

For African economies, the shift in oil prices carries mixed consequences. Bloomberg Economics said only a small group of sub-Saharan countries stand to gain if crude remains elevated. If prices hold close to $85 per barrel, roughly $85,000 for every 1,000 barrels of crude traded, Nigeria, Angola and Ghana are expected to see stronger current-account balances. In contrast, countries such as the Democratic Republic of Congo, South Africa and Kenya could face rising pressure from higher import costs.

Higher oil prices often weaken currencies and push up inflation across much of Africa. That combination can force central banks to consider raising interest rates in order to contain price pressures. Among the continent’s major economies, South Africa appears most exposed. The country imports a large share of its fuel and remains vulnerable to shifts in global supply. If exporters such as India and Oman, two key suppliers, reduce shipments, South Africa’s domestic fuel supply could tighten further. Data from the Central Energy Fund already show that petrol and diesel prices are likely to increase in April.

Traders have begun to factor in the risk of a rate increase by the South African Reserve Bank later this month. Bloomberg Economics estimates that higher oil prices could reduce South Africa’s current-account balance by about 1 percent of gross domestic product, equivalent to roughly $4 billion based on an economy valued near $400 billion.

Higher oil prices boost Nigeria’s economic outlook

For Nigeria, the outlook is more favorable. Higher crude prices translate directly into stronger export earnings and improved government revenue. Nigeria is also preparing to expand exports of refined fuel. Industrialist Aliko Dangote has said his 650,000-barrel-a-day refinery could increase shipments of refined products to Europe if market conditions remain supportive.

Nigeria’s government is also working to lift production. Speaking in Abuja at the 9th Nigeria International Energy Summit, President Bola Tinubu, represented by Vice President Kashim Shettima, said the country aims to raise crude output to 3 million barrels per day by 2030. Officials say the full implementation of the Petroleum Industry Act has improved clarity in the sector and helped restore investor confidence.

Investment activity is picking up in Nigeria’s oil and gas sector. Authorities say final investment decisions on major projects have surpassed $8 billion, while crude production has risen to about 1.6 million barrels a day. The government’s Project One Million Barrels Per Day initiative aims to lift output through security and operations. Officials are targeting output of 2.5 million barrels per day by 2027. Natural gas is also becoming a larger part of Nigeria’s energy plans. Domestic supply recently exceeded 2 billion cubic feet per day for the first time, helping support electricity generation and industrial activity.

Angola boosts output with N’Dola Sul

Angola, Africa’s second-largest oil exporter, is also positioned to benefit if prices remain high. Production has recovered above 1 million barrels per day after several years of decline, reaching about 1.03 million barrels per day in August after briefly dipping below that level in July 2025. New projects are helping support the recovery. One of the latest is the N’Dola Sul development, which began production on Dec. 24.

The project, led by Angola’s National Oil, Gas and Biofuels Agency with Chevron and other partners, is expected to produce up to 25,000 barrels of oil per day from 12 wells.

At current prices near $84 per barrel, that output could generate roughly $2.1 million in daily crude revenue. The oil will be shipped to the Malango Terminal in Cabinda, while about 50 million cubic feet of gas per day will be sent to the Angola LNG plant.

Paulino Jerónimo, chairman of the National Oil, Gas and Biofuels Agency, said the project marks another step in expanding Angola’s offshore production. Frank Cassulo, managing director for Southern Africa at Chevron, said it also reflects the long-term commitment of Cabinda Gulf Oil Company Limited, Chevron’s Angolan subsidiary and operator of Block 0, to invest in the country’s energy sector.

The development also ties into Angola’s broader refining plans. The government is building the Cabinda refinery, a 30,000-barrel-per-day facility expected to become the country’s second refinery and its first new one since independence nearly five decades ago. The project aims to reduce reliance on imported fuel, which has weighed on public finances.