“In contrast to other major African crude oil producers, Algeria has steadily increased its oil production and is thus better placed to profit from the Putin bonus… rather than accruing as savings or investment in physical or social infrastructure”.
Russia’s invasion of Ukraine has sent crude oil prices to the highest level since 2008, nearing $140 per barrel. This has stoked fears of rising inflation in the major oil-importing economies and of possible economic recession. The opposite is true for African crude oil-producing countries, which are currently reaping the benefits of the rise in crude oil prices.
Higher crude oil prices translate to a boom for the continent’s biggest crude oil producers – Nigeria, Angola, Libya, and Angola, which are witnessing an increase in oil revenues and foreign exchange gains.
Despite falling short of OPEC’s crude oil output targets due to underinvestment in their energy sectors, these African countries have benefited from a 91 percent surge in crude oil prices on a year-on-year basis, thus enabling them to earn more money on crude oil exports.
Using OPEC figures, we have analysed how much African major oil exporters generate daily as a result of the spike in oil prices.
Source: OPEC January 2022 Crude Oil Report, Arbiterz Research
Crude Oil Production: 1.4 million bpd
Topping the list of oil producers in Africa, Nigeria has been underproducing crude oil below OPEC quotas of 1.68 million – 1.74 million barrels per day in the last three months due to security challenges and underinvestment in its energy sector. But the spike in crude oil prices is compensating for reduced production and exports. The Nigerian government earned $135 million per day at the present production level of 1.4 million barrels per day and a crude oil price of $96.84 per barrel before the Russia-Ukraine geopolitical situation. However, the rise in crude oil prices to a high of $127.98 since Putin’s invasion of Ukraine has seen Nigeria’s revenue from crude oil exports rise to $179 million. However, the additional $44 million that Nigeria earns from oil exports is consumed by oil subsidy rather than accruing as savings or investment in physical or social infrastructure.
Crude Oil Production: 1.19 million bpd
Based on OPEC crude oil production data, Angola has increased its oil production from 1.12 million barrels per day in December 2021 to 1.193 million barrels per day in January 2022. Angola earned $116 million per day at its current production level of 1.193 million barrels per day and a crude oil price of $96.84 per barrel before the Russia-Ukraine geopolitical conflict. However, with the rise in crude oil prices to $127.98 this week, the Angolan government’s crude oil earnings surged to $153 million per day, trailing Nigeria by $26 million per day.
Despite the fact that Angola’s crude oil output has been dropping due to a lack of investment in its energy sector as well as a natural decline in aging oil fields, the country profited from the rise in crude oil prices, raising revenue by more than $35 million per day.
Crude Oil Production: 1.08 million bpd
Libya has lost its top position as Africa’s second oil-producing country to Angola, owing to a continuous fall in crude oil production output from its highs in 2021 to 1.08 million barrels per day in January 2022, according to OPEC crude oil production stats. The drop in crude oil production volume in the North African nation is attributable to the country’s political conflict since the 2011 toppling of Qaddafi and the closure of its two main oil fields, Sharara and El-feel.
However, at the present production rate of 1.08 million barrels per day and a crude oil price of $96.84 per barrel before global geopolitical turmoil, Libya earned $104 million per day from crude oil sales. With crude oil prices reaching a high of $127.98 earlier this week, Libya has increased crude oil earnings to $137 million per day.
While Libya’s crude oil production has decreased, the country has benefited from the rise in crude oil prices, raising revenue by more than $10 million per day.
Crude Oil Production: 977,000 bpd
In contrast to other major African crude oil producers, Algeria has steadily increased its oil production from 889,000 barrels per day in 2020 to 977,000 barrels per day in January 2022, according to OPEC production figures. The country earned $95 million per day at its current production level of 977,000 barrels per day and a crude oil price of $96.84 per barrel before Putin’s invasion of Ukrain. However, with crude oil prices rising to a high of $127.98 earlier this week as geopolitical tensions intensified, Algeria has successfully capitalised on the price increase by raising revenue to $125 million per day.
As Angola continues to invest in its energy industry, we expect the country to continue to benefit from the price increase in the crude oil market.