Iran War Triggers Hunt to Secure New Fuel Supplies in Africa

2w96)3tczslei3zd]daus3(p_media_dl_1.png IEA

Article content

(Bloomberg) — Many African economies are running on weeks of refined fuel as the Iran war chokes off shipments through the Strait of Hormuz, forcing governments to scramble for alternatives.

Article content

About 600,000 barrels a day of oil products that typically flow to the continent from the Middle East are at risk, with tanker traffic through the critical waterway slowing to a trickle, according to the International Energy Agency. For some countries, those cargoes effectively meet all demand.

Article content

Article content

Article content

“We’re looking everywhere” for supply options, Jacob Mbele, director-general at South Africa’s Department of Mineral Resources said in an interview in Cape Town. “We’re comfortable that in the coming weeks or so, we are safe,” he said, adding that overall “the situation is fluid, it changes every day.”

Article content

Article content

Securing fuel will be harder for developing nations as richer buyers may be able to outbid them. The squeeze is exposing how refinery closures and underinvestment have left much of the continent dependent on a single trade route now at the center of a widening conflict. 

Article content

Africa, which accounts for about 7% of the world’s crude output, had seen refining capacity shrink by about a third in the past two decades before billionaire Aliko Dangote started his facility in Nigeria two years ago.

Article content

The refined-fuel supply crunch is especially severe across east and southern Africa, where the margin for error is thin. The two regions receive about 75% of their fuel imports from the Middle East, according to Elitsa Georgieva, executive director at energy consultancy CITAC.

Article content

Kenya, which consumes about 100,000 barrels of fuel each day and imports all of it, requires importers to hold 21 days of stock. That leaves it vulnerable to a loss of even a single shipment. 

Article content

Article content

As a benchmark, the IEA requires members to hold at least 90 days of net oil imports. No African country is a member of the global energy watchdog.

Article content

The biggest fuel suppliers to Kenya are “rationing product,” said Martin Chomba, chairman of the Petroleum Outlets Association of Kenya. A few distributors are “experiencing stock outs in the villages,” he said.

Article content

Ethiopia asked its citizens to be frugal in their use of fuel as the government directs energy to “basic and essential needs,” Prime Minister Abiy Ahmed said in an X post on Monday.

Article content

Regulated prices of diesel and gasoline in many countries on the continent may obscure future risks, leaving fuel marketers on edge.

Article content

Here’s how sub-Saharan Africa’s top economies are dealing with the crisis:

Article content

Kenya

Article content

In East Africa, Kenya imports fuel to the port city of Mombasa, the site of a dormant refinery that shut because is was unprofitable. The nation that’s dependent on imports, renewed a supply contract last year with Saudi Aramco, Emirates National Oil Co. and Abu Dhabi National Oil Co. Oil marketing companies are required to keep three weeks of operational stock, with the countdown on that starting if an expected fuel cargo fails to arrive.