What does a 100 million barrel release mean for Africa’s diesel bill?
G7 members agreed on 2 October to release 100 million barrels of diesel, petrol and crude from emergency reserves over four months, with a front-loaded diesel release in the first twenty days. Brent eased to around $100.8, but the fuel African importers buy most will take longer to reach their pumps.
International Energy Agency members agreed in March to coordinate a record release of 400 million barrels from strategic reserves, after the conflict around the Strait of Hormuz removed a large share of the world’s seaborne oil and pushed Brent above $100.
Prices stayed high through the summer, and diesel reached records in both the United States and Europe, which led to a G7 call convened by French President Emmanuel Macron on 2 October. Members agreed to release up to 100 million barrels of diesel and other reserves through the IEA, starting immediately and running over four months, with a substantial share of diesel released within the first twenty days.
Brent traded around 1.5% lower at $100.8 a barrel after the announcement, and Macron said three-quarters of prewar volumes were again moving between Hormuz and the Yanbu pipeline.
Diesel matters more to African economies than the headline crude price, since it runs the generators that factories, mines and hospitals rely on when the grid fails. Sudan’s fuel shortage has deepened through the conflict and the global price shock, and the Stanbic IBTC PMI released on 2 October showed higher fuel prices pushing transport costs up across Nigeria’s private sector.
How much of the diesel release reaches African importers, and when, depends on where it goes first. The front-loaded portion is due within twenty days, with the remainder spread over the following four months.
Images: Reuters
