Africa’s oil producing nations have not been spared the impact of the global decision to reduce oil output. About 14 countries in sub-Saharan Africa produce oil, which accounts for most of their annual export income.
Crude oil prices rose marginally on Friday (May 1) as the Organization of Petroleum Exporting Countries (OPEC) and their allies started reducing output.
Major producers in April agreed to a production cut deal by 10 million barrels a day in May and June. The record production cut is a way of balancing the mismatch between supply and demand in global oil prices due to the coronavirus pandemic.
The COVID-19 outbreak has reduced demand for oil due to isolation and travel restrictions measures introduced globally to slowdown the spread of the disease.
Africa’s major oil producers include Nigeria, Angola and Gabon.
A rise in oil prices between $50 to $60 would allow them to earn badly needed foreign exchange to carry out development projects.
The World Bank and the IMF have urged African oil producing nations to diversify their economies to reduce their over-dependence on oil to improve the living standards of their people.
The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, have agreed to cut oil output by 10 million barrels per day (bpd) in May and June.That’s according to a statement released by the group.
The move according to analysts is designed to help prop up petrol prices, which have been battered by the Coronavirus pandemic.
OPEC+ said the cuts would be eased between July and December to eight million bpd, and the reductions would then be relaxed further to six million bpd from January 2021 to April 2022. The group said it would hold another video conference meeting on June 10 to assess the market. But it did not mention the conditions for countries outside the grouping to reduce oil output.
A worldwide lockdown to slow the spread of the coronavirus pandemic has cut fuel demand by roughly 30 percent and contributed to a crash in prices that took major benchmarks down by more than two-thirds before they recovered in recent days in anticipation of action from oil producers.
In Ghana, fuel prices have reached very low levels for some time now, and it is projected to go further down.
Prices of Brent crude is presently going for US$31.48 on the world market.
A gallon of petrol is now going for the average of GHS18 instead of the previous GHS23.