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COVER STORY
Africa: The Aftermath of COVID-19, Price War By JEROME ONOJA & JOSEPH CHANG
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ith the outbreak o f C O V I D -1 9 i n Wu h a n , th e province of Hubei, China’s demand for crude oil was stifled causing a drop of about 3million b/d as at early February because many of its factories closed. Not a lot of experts predicted the scale to which the disease would escalate. Today it has assumed a global pandemic proportion, eventually spurring a price war between Saudi Arabia and Russia which began early March as they disagreed on the modalities for production adjustment in order to stem the continued oversupply of the market. These unfortunate twin shocks of the novel coronavirus and a historic price fall are beginning
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Majorwaves Energy Report
APRIL 2020, Vol 3 No 4
to have devastating effects on the African continent, seeing that some countries operate a mono-product economy, with oil being the only commodity. The hardest hit will be countries like Angola, Nigeria and Libya. Others like Equatorial Guinea, Cameroon, Ghana, Mozambique and Senegal aren’t spared as their economic projections have been torn apart. With ongoing negotiations and eventual implementation of production adjustment among OPEC+ countries, following positive outcomes from Russia and Saudi Arabia, initiated by the U.S., we hope to see prices bounce back. But, a reflective price rise is only anticipated after the COVID-19 curve is flattened, factories around the world re-open and life returns to normal. When
would that be? How fast can African producers shake off the effect which has added to a plethora of prepandemic challenges? The global economy faces its biggest danger since the financial crisis of 2008. Going by analysis in the OECD Interim Economic Outlook Forecasts published in March 2020, prior to this twin attack, the growth rate in world gross domestic product (GDP) for 2020 was projected to be 2.4%, a drop from 2.9% in 2019. It further stated that, a longer lasting and more intensive COVID-19 outbreak, spreading widely throughout the Asia-Pacific region, Europe and North America, would weaken prospects considerably.
