OPEC Production Cuts Puts African Oil Producers at Risk

0
199
Reading Time: < 1 minute

SWITZERLAND, MAY 05

Africa’s top oil-producing nations have been negatively impacted by OPEC’s decision to reduce oil output. About 14 countries in Sub-Saharan depend on oil for majority of their annual export income.

The COVID-19 outbreak has crippled global oil demand as people adhere to social distancing and travel restrictions measures imposed to curb the rapid spread of the disease.

This development incited the decision taken by Organization of Petroleum Exporting Countries (OPEC) and its allies to cut output.

Major producers agreed in April to a production cut deal by 10 million barrels a day in May and June. The cut is geared at striking a balance between supply and demand of oil to stabilize prices.

Crude oil prices rose marginally on Friday (May 1) as OPEC and its allies started reducing output

Countries like Nigeria, Angola and Gabon will be hit the hardest if oil prices fail to rebound to the $50- $60 threshold. The foreign income derived from oil sales is used to fund majority of their development projects and cater for the welfare of their people.

The World Bank and IMF have implored African oil-producing nations to diversify their foreign revenue streams and reduce their over-dependence on oil to adequately provide for the needs of their citizens.

Leave a Reply

%d bloggers like this: