Commentary & Analysis

Energy crises are relentlessly damaging African economies. African consumers continue to face significant rises in oil prices, with no end in sight. While the costof-living marginally stabilized after the Covid pandemic, the conflict in the Middle East thrust the region into another era of uncertainty. The US-Israel-Iran War, entering its third month, has caused energy prices to soar as 20% of global oil supply remains at a near complete standstill in the Strait of Hormuz.

Disruptions in the Gulf have sharply reduced oil supplies to Africa as the continent relies heavily on petroleum imports from this region. With the Strait of Hormuz blocked, African nations are compelled to seek alternative suppliers, increasing competition and costs. In Kenya, violent protests have broken out as civilians take to the streets to decry high living costs. Landlocked countries such as Zambia and Botswana are unable to receive necessary imported goods, as neighboring countries are reducing or banning oil exports due to their low energy supplies.

In addition, nearly 40% of the African population lacks access to energy due to energy networks being dated and in dire need of renewal and investment, resulting in frequent power outages in South Africa, Ghana, and elsewhere. Geopolitical shocks have increased inflationary pressures and weakened foreign currency reserves as importing countries are forced to pay higher prices for petroleum products. Simply put, there is not enough supply on the continent to meet demand.

To counter this, many countries including South Africa and Kenya are restricting their fuel exports to landlocked countries such as Malawi, leaving them scrambling for alternatives and paying high premiums. Despite recent energy discoveries, African countries still have low refining capacity, and higher imports are eating away at budgets and reserves.

At the beginning of the crisis, African governments relied on dwindling fuel reserves, uncertain of what the extent of the conflict would be. As reserves ran low and alternative sourcing became costlier, heavily indebted countries including Malawi and Egypt were faced with the added burden of emergency borrowing from international institutions such as the IMF and Afreximbank, compounding their vulnerable financial situations and deepening their already burdensome debt and poor credit ratings.

The Push for African Energy Independence

There is a new push for African energy independence, driven by the realization that ongoing geopolitical conflicts expose significant vulnerabilities for African countries. While the crisis has placed immense pressure on African economies, it may also provide the impetus for governments to finally pursue long-overdue investments in energy security and self-sufficiency. With no imminent end to the turmoil, the US partially lifting sanctions on Iranian oil in response to rising prices, and the UK considering easing sanctions on Russian oil, an immediate return to stability in the Strait remains uncertain.

Africa must become energy-independent to withstand economic shocks from geopolitical events. This includes through investment in exploration and production, modernizing and building refineries, and reaching the capacity to utilize them. However, achieving energy independence will not be straightforward. Limited access to capital, inadequate infrastructure, policy uncertainty, debt burdens, and regulatory barriers continue to deter investment across much of the continent.

For African countries such as Nigeria, Angola, Libya, and Gabon, the war has created a large windfall. So much so that in Nigeria, Dangote is seizing the opportunity to ramp up production at the Dangote refinery, looking to reach 1 million barrels per day, in addition to a half-million-barrel-per-day refinery in Kenya. Many African countries, such as Mozambique, Senegal, Côte d’Ivoire, and Mauritania, have vast untapped oil reserves, presenting significant potential to join OPEC and contribute substantial volumes to the oil and gas sector. Following major discoveries, these countries could possibly become energy leaders in the coming years.

If prices fall there will be strains on foreign currency reserves and African producers will not have the same capacity to rapidly increase production. To offset the price decline and in anticipation of such a scenario, many African countries are seeking energy independence. For instance, South Africa is looking to restart its oil refineries, and Ghana is in discussions to restart its Tema Oil refinery and is seeking investors and operators to take on its modernization and reboot project.

Congo, Uganda, South Sudan, Tanzania, and Kenya are also eyeing a regional refinery to end dependence on fuel imports, but require substantial investment to make it happen. African governments must balance protecting their domestic economies while maintaining a conducive environment for investors. Without investor-friendly policies, access to finance, and regional cooperation, Africa's ambitions for energy independence may remain difficult to achieve despite its vast resource potential.

Recently, some African countries have made significant oil and gas discoveries that necessitate an influx of capital for exploration and supporting infrastructure. The World Bank estimates that 40 percent of natural gas discoveries occurred in Africa between 2010 and 2020. Notably, Senegal discovered an estimated 15 trillion cubic meters of natural gas off its shore with Mauritania in 2015, which has the potential to address energy challenges, grow export revenues, and stimulate the economy through foreign direct investments.

Africa, however, must adopt policies that are attractive for investors. For instance, Dangote has made Kenya implement anti-dumping laws on imports as a prerequisite to initiating a 17 billion USD refinery in East Africa. Without these protections, foreign products from lower-cost centers will be more competitively priced than local African products, thereby harming domestic economies.

Following Ghana’s 2025 election, foreign investors such as ENI have returned to the country’s potential oil and gas fields after having projects taken away from them under the last administration. The appearance of a return to respecting the rule of law has reignited investor confidence, an example that other African countries should take note of.

The UAE’s Exit from OPEC and the Changing Balance of Power

The UAE’s departure from OPEC comes at a time when the cartel is facing growing challenges to its influence over global energy markets. Established in 1960, OPEC has sought to regulate petroleum markets through production quotas designed to manage global oil supply and support prices. While the organization remains one of the most influential actors in the energy sector, its share of global oil production has gradually declined as members have departed and non-OPEC producers have increased output.

Saudi Arabia has historically been the dominant member within OPEC and its production quotas have often reflected the Kingdom's priorities. Other members including Angola, Qatar, and the UAE found the production quotas imposed on them far too restrictive and chose to leave. These exits have weakened the cartel’s influence on global markets as its control of oil production has been reduced from 50% to approximately 30% of global production.

Angola left the group as it sought to increase production and attract more investors, but low quotas from the cartel deterred investors who saw limited opportunities for long-term growth. Angola faced further difficulties in its policies for foreign businesses in the oil and gas sector, including high royalties and stringent local content requirements. While it blamed OPEC’s low quotas for the exodus of its investors, following Angola’s departure from the cartel, investors still didn’t return. It wasn’t until the country changed its policies to be more investor-friendly that they started to consider investing again, highlighting the importance of implementing policy changes to encourage the private sector to develop its energy potential.

OPEC's need to restructure is driven by mounting pressures: The UAE's departure leaves quotas unfilled, while geopolitical conflict has damaged production facilities in Saudi Arabia, Kuwait, and Bahrain. The blockade of the Strait of Hormuz has severely constrained Gulf states’ storage and export capacities, stalling global oil trade. With Gulf refineries projected to take 3-5 years to fully recover, OPEC faces a critical shortage in production volume. As a result, the cartel must adapt to maintain its influence, balancing the urgent need for new members and increased quotas against reduced output from its traditional powerhouses.

For African producers, however, the UAE's departure may create an opportunity to increase their own influence within OPEC as the organization seeks to maintain its market share, production volumes, and relevance in an increasingly competitive global energy market.

What the UAE’s Exit Means for African OPEC Members

The UAE’s exit from OPEC has significantly altered the cartel’s dynamics, elevating Nigeria and, by extension, Africa, to a more influential role. As Africa’s largest oil producer, Nigeria now holds a larger share of OPEC’s market, positioning the continent to shape key decisions on production quotas and strategy. This shift creates an opportunity for Africa to assert itself, but also raises the stakes: OPEC may consider re-admitting Angola, one of Africa’s top producers, to help recover lost market share and reinforce its global standing. However, Angola’s return would likely require more favorable quotas, challenging OPEC to adapt its approach to membership and allocation in response to these new realities. While neither OPEC nor Angola has indicated their intentions to rejoin the cartel, it could be an option to explore.

Greater influence within OPEC allows African members to play a pivotal role in setting global oil prices and negotiating production targets. For Saudi Arabia, the cartel’s de facto leader, maintaining unity will depend on building alliances with African producers and potentially increasing their quotas to offset the UAE’s departure. Meanwhile, if the UAE successfully ramps up production outside OPEC, the cartel’s ability to regulate global supply and prices could be further undermined, making African participation even more critical for OPEC’s relevance.

OPEC offers a platform for African countries to access technical expertise and shared best practices, supporting the development of their energy sectors. The OPEC Fund can also channel investment toward African infrastructure, helping to unlock the continent’s vast untapped potential and reduce vulnerability to external shocks. Thus, the evolving balance of power within OPEC is both a challenge and a strategic opportunity for Africa to increase its agency within the global energy landscape.

The Middle East conflict has exposed Africa’s acute vulnerability to external energy shocks, fueling inflation, shortages, and economic instability. While high import costs and weak refining capacity persist, the crisis has intensified calls for energy independence and created new leverage for African oil producers. With the UAE’s exit shifting OPEC’s balance of power, African members like Nigeria are positioned to play a larger role in shaping global markets. To fully seize this moment, African governments must invest in refining infrastructure and business-friendly reforms. Long-term energy security will depend on Africa’s ability to industrialize and control more of its energy value chain.

Michael W. Wilson is a Researcher at the Gulf Research Center