Expensive oil: very different effects across African economies

On 16 September 2026, Brent crude was still trading at around US$105 a barrel, despite falling by more than 3% during the day. The easing mainly reflected the partial restoration of some Saudi exports. Tensions in diesel and other refined-product markets nevertheless remained severe.

In Africa, higher oil prices do not produce a single effect. They can raise an exporter’s revenue, increase the import bill of a country dependent on foreign supplies, improve the profitability of a refinery, or increase transport and electricity costs.

The position of each economy in the oil chain matters. The continent includes large crude exporters, smaller producers, countries with no oil resources, States that refine a substantial share of their needs, and others that still import most of their fuels.

Brent is not the price paid at the pump

Brent is a crude oil produced in the North Sea. Its price is used as a benchmark for a large part of world oil trade. It is neither petrol nor diesel.

Between crude oil and the fuel sold to consumers come transport, refining, storage, distribution, taxes, commercial margins and, in some countries, public subsidies.

Crude prices can fall while diesel remains expensive. Current markets illustrate this clearly: diesel refining margins in Asia have reached exceptionally high levels, above US$87 a barrel.

For African economies, that gap between crude and refined products is decisive. A country may export crude while importing some of its fuels, benefiting from a high export price while also bearing the higher cost of refined products.

Nigeria: producing oil was not enough

Nigeria is one of Africa’s leading oil producers. For years, inadequate refining capacity still forced it to import large quantities of petrol.

The start-up of the Dangote refinery is changing that position. In 2026, the plant is producing roughly 270,000 to 300,000 barrels of petrol a day. Nigerian petrol imports have fallen from around 400,000 barrels a day in 2024 to about 83,000 this year.

The Nigerian case separates two things that are often confused: extracting a raw material and controlling its transformation.

A country that exports crude but imports fuel leaves part of the value created by refining abroad. It is also more exposed to transport costs and fluctuations in international refined-product markets.

A domestic refinery does not remove those risks, but it can reduce dependence on imports and create regional export opportunities.

Dangote now exports diesel, gasoil and kerosene to West Africa and Europe. Its diesel and gasoil exports have increased in 2026, while the refinery has become an important supplier of aviation fuel.

Senegal: a new producer, but still a modest oil power

Senegal is in a different position. Production from Sangomar now allows it to export crude, but volumes remain modest by African standards.

A rise in Brent can improve export receipts without turning the country into a major beneficiary of an oil-price shock. Imports of refined products, production contracts, operating costs and the share of revenue actually captured by the State all have to be taken into account.

The fiscal effect also depends on domestic pricing policy. If the State seeks to limit an increase in pump prices, it may absorb part of the shock itself. Some of the gain from exports can then be offset by the cost of stabilising domestic prices.

Kenya, Rwanda and importing countries: the external bill comes first

For economies that import most of their oil and fuels, the effect is more direct.

Kenya plays an important role in regional supply. In June 2026, it signed several agreements with Rwanda aimed at securing fuel imports moving through Kenyan infrastructure.

When oil remains expensive, the import bill rises. More foreign currency, especially US dollars, is needed to buy the same quantity of fuel. If the national currency depreciates at the same time, the shock becomes stronger: the product costs more in dollars and each dollar costs more in local currency.

The increase then spreads through transport. Diesel powers lorries, buses, some agricultural machinery, generators and many industrial activities. Its price feeds into the cost of a wide range of goods.

A bag of flour transported hundreds of kilometres, vegetables carried to a capital city or a product unloaded at a port all include an energy cost.

When oil feeds inflation

Economists speak of “imported inflation” when domestic prices rise partly because products bought abroad have become more expensive.

Energy has a particular role because it enters almost every activity. Households pay more for fuel, but also for transport, some food products, materials and sometimes electricity.

The effect is often heavier for lower-income households, which spend a larger share of their income on essentials and have less room to absorb a prolonged rise in prices.

Governments then face several options: allow prices to rise, reduce some taxes or subsidise part of the cost. Each choice has different consequences for the budget, businesses and households.

Subsidies: who is protected, and at what cost?

An energy subsidy keeps the price paid by the consumer below the real cost of supply.

In the short term, a subsidy can protect purchasing power. If world oil prices remain high, the budgetary cost can rise very quickly because the State must finance the gap between the purchase cost and the price maintained at the pump.

Targeting raises another problem. A general subsidy benefits all consumers, including those who use the most fuel. In absolute terms, better-off households may receive more support than poorer households.

Several institutions therefore favour replacing some general subsidies with more targeted assistance. Such a policy still requires reliable registers, clear identification of beneficiaries and payment systems capable of reaching them.

African producers do not all gain in the same way

A high oil price tends to increase exporters’ receipts, but the result depends on contracts, volumes, production costs and the tax regime.

Where the State captures a large share of the oil rent, public revenue can rise quickly. Elsewhere, operators may first recover investment costs, delaying the increase in public income.

Production levels matter just as much. A high price applied to falling output may generate less revenue than a slightly lower price applied to a larger volume.

Algeria, like other OPEC+ members, regularly adjusts production within agreements intended to influence market balance. Oil revenue depends on both the price and the quantity actually brought to market.

Refining is regaining strategic importance

Much of Africa’s oil debate has long focused on extraction: ownership of deposits, contracts, taxation and the State’s share.

Those questions remain essential, but they do not by themselves explain a country’s energy security.

Refining transforms crude oil into usable products: petrol, diesel, kerosene, fuel oil and other derivatives. Current pressure on diesel markets shows that refined products can become scarce even when crude remains available.

Attacks on several Russian refineries and disruption in the Middle East have reduced available capacity and intensified pressure on fuel markets.

For African economies, this gives greater weight to investment in refining. The Dangote refinery is already having effects beyond Nigeria. Other projects, including in Kenya, are also taking on strategic significance in a context of continuing dependence on imports.

Extraction figures tell only part of the story. Domestic processing capacity matters as well.

A global shock reveals national strengths and weaknesses

An oil crisis does more than redistribute income between exporters and importers. It exposes infrastructure and dependencies.

An economy with an efficient refinery can supply neighbouring countries and retain more value added. A landlocked country, or one dependent on a single supply corridor, is much more exposed to disruption.

A producer able to raise output quickly can take advantage of a tight market. Another constrained by technical or security problems may miss the opportunity.

Periods of tension expose what a country actually has: production capacity, ports, pipelines, stocks, refineries, distribution networks, foreign-exchange reserves and fiscal room.

A US$105 barrel does not tell the whole story

Brent attracts attention because it gives a single, striking figure. That figure alone does not describe what happens inside an African economy.

In Nigeria, the present period highlights the new importance of refining.

In Senegal, higher prices can improve revenue from a young oil sector without removing fiscal constraints or the need to import refined products.

In Kenya and other importing countries, the main effect is a higher energy bill and greater inflationary pressure.

In States that heavily subsidise fuel, the shock reaches the public finances directly.

In producing countries without sufficient processing capacity, it revives an old contradiction: exporting crude while importing some of the products made from it.

Oil is traded on a global market. Its economic effects remain highly dependent on national structures.