A major fallout (along with the attendant loss of lives and cities) of the Russian war on Ukraine is the disruption of supply chains, leading to an escalation in the cost of crude oil. As the conflict crosses into the sixth week, the global cost of the war is estimated to be north of $400 billion. The resultant sanctions from the US and other Western nations on Russia and its exports have had consequences for not only the country but the world at large. Russia is the world’s second-largest producer of oil and the embargo on its product has caused the commodity’s price to spiral. To reduce the inflation and high prices of crude oil being experienced in his country, President Joe Biden has directed the release of a part of US strategic oil reserves, starting this May. The impact of this move on global demand as well as on African economies, many of whom export oil, is the subject of Tuesday’s Business Edge. Lekan Onabanjo is joined by Desmond Agboifo, energy expert and Director of Desyton Institute for Petroleum Economics and Management who speaks from Nigeria’s capital Abuja.
“Currently, we have a three-digit oil price, which is unprecedented,” Agboifo says as he explains the current state of oil price which has increased from its all-time low before the Ukraine crisis. Therefore it makes it understandable that the United States will stay in front of the trend and find ways to keep it stable- by itself, it consumes 19 million barrels per day.
All of this will definitely impact the African continent one way or another. According to Desmond Agboifo, the consumption trends across the world means that should the conflict continue through the 180 days that the US strategic reserves are meant to cover, it directly affects the output of Africa’s oil producers.
Watch the full conversation above.