In this interview with DAMILOLA AINA, the Chief Executive Officer of petroleumprice.ng, Jeremiah Olatide, discusses how the five-month conflict involving the United States and Iran, along with disruptions to the Strait of Hormuz, affected global crude oil prices, Africa’s fuel supply chain and Nigeria’s petroleum industry
Five months after the US-Iran war began, how would you evaluate its impact on global crude oil prices and the broader petroleum industry?
The last five months have been troubling all over the world. The last time we had a shortage in the distribution of crude across the world was in the 1970s and, for Africa, with the exception of Nigeria, 80 per cent of the continent imports petroleum products. The continent depends more on imports, so the conflict had greater effects on other importing African countries, and it was so negatively impactful that Brent crude hit $120 per barrel; the last time we experienced that was a few years ago. So, it had an effect on our refined products, even as a producing country of both crude oil and refined products; it had quite a negative effect on our prices. Currently, it is getting better. Prices have dropped to an average of $70 for WTI and Brent, but because 20 per cent of the movement of crude passes through the Strait of Hormuz, and Africa depends on quite a lot of products coming from that route, it had quite a few negative effects, with prices of refined products surging by over 100 per cent and a supply glitch in many African countries, such as Kenya and South Africa, which experienced queues at their retail outlets.
It also had negative effects on other essential products; food prices skyrocketed. They went up by an average of 15 per cent in Africa. I must say the effects are quite enormous. Now that the war is winding down, I am hoping that there will be a high level of ease in the petroleum market across Africa, but there is definitely now a bit of ease in the petroleum market in Africa.
How critical is the Strait of Hormuz to global oil trade, and what impact did its closure have on the energy market?
The Strait of Hormuz is a strategic route for the passage of crude and refined products across the world. In short, reports have it that over 130 vessels pass through the Strait of Hormuz on a daily basis, and that number dropped to as low as ten ships at one point. Now that the war has eased, it has moved up to around twenty ships.
It has had quite significant effects on global trade, with prices rising by as much as over 100 per cent in several countries of the world. In short, the South Asian countries depend heavily on the Strait of Hormuz. Africa as a continent also had quite a large effect on its foreign trade, because we import quite a lot of refined products from Europe, and because of the closure, those movements were disrupted, leading to scarcity, leading to a hike in the prices of other essential products in Africa. It had quite a lot of negative effects. So, for me, the five months that the Strait of Hormuz was closed were turbulent months for Africa, because we depended so much on the inflow of crude and refined products from Europe.
