According to the latest report from the International Energy Agency (IEA), observed global oil stocks have increased significantly in recent months, threatening the revenues of exporting African countries. In April, crude inventories climbed by 19.3 million barrels, with onshore reserves jumping by 83.5 million barrels after eight months of decline. This surge in stocks follows a marked slowdown in global demand, while supply remains strong.
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The countries of the Organization for Economic Co-operation and Development (OECD), main consumers, saw their demand fall by 815,000 barrels/day year-on-year in March, exceeding the gains of 650,000 barrels/day in non-OECD countries. In total, global demand fell by 165,000 barrels/day over this period. The slowdown is expected to continue with growth revised downwards to 960,000 barrels/day in 2024, compared to 1.06 million previously. For 2025, forecasts are gloomy at +1 million barrels/day, hampered by a gloomy economic environment and progress in clean technologies.
This glut of oil caused Brent prices to fall below $78 per barrel in early June, far from the 2024 highs of nearly $92 in April. OPEC+ having announced the gradual restart of voluntary production cuts from the 4th quarter, traders sanctioned a market which promises to be even better supplied.
| Producing countries | Production April 2024 (in mb/d) | Production May 2024 (in mb/d) | May production gap compared to quotas |
|---|---|---|---|
| Algeria | 0.91 | 0.9 | -0.01 |
| Congo | 0.26 | 0.26 | -0.02 |
| Equatorial Guinea | 0.05 | 0.06 | -0.01 |
| Gabon | 0.21 | 0.22 | 0.05 |
| Nigeria | 1.28 | 1.35 | -0.15 |
| Libya | 1.19 | 1.19 | unspecified |
For African exporting countries, this deterioration of fundamentals represents a serious economic and budgetary threat. Nigeria, Algeria, Angola, Libya and others depend crucially on oil revenues to finance their imports and public spending. A fall in prices reduces their export revenues in a context already weakened by debt and political instability for some.
Nigeria, Algeria, Libya: the losing trio
Nigeria, Africa’s leading producer with 1.35 million barrels/day in May, is particularly economically vulnerable to price fluctuations. Black gold still represents around 90% of its exports and a third of its GDP. Algeria (3rd with 0.9 mb/d) derives around 60% of its tax revenues, Libya (1.19 mb/d) 95% of its external revenues. Conversely, Egypt, South Africa, Morocco and other large importers will benefit from a lower energy bill.
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Beyond the direct oil counter-shock, it is the strength of the global economic recovery that will be put to the test if prices stagnate at low levels for a long time. Anemic growth would weigh on demand for exports and investments across the region.
The fate of African producing countries thus seems to hang on the next decisions of OPEC+. Its weight will determine whether it will succeed in sustainably rebalancing the world market through additional cuts, or whether an era of cheap and abundant oil will usher in, at the risk of aggravating social tensions in the most dependent countries.
