Chigozie Amadi
African energy markets are entering a period of unprecedented volatility as a “tense geopolitical situation” in the Middle East threatens to trigger the largest oil market disruption in history
Speaking at a MEMAN webinar with the theme ‘West African market resilience in the face of the geopolitical situation’ Stan Drochon, Africa Head of Fuels and Refining at S&P Global Energy, warned that the continent is “moving rapidly” toward an oil shock scenario
He noted that Downstream regulation in 2026 will demands balancing low, socio-politically sensitive pump prices against the need for supply-cost competitiveness, investor incentives, and government revenue.
Stressing that ,navigating these conflicting goals requires managing market-driven prices for fuel products while ensuring infrastructure investment and supply security.
The “Hormuz Bottleneck”
According to him ,The crisis is centered on the Strait of Hormuz, where tanker traffic has plummeted from a daily average of 60 vessels to just 2 or 3 .This bottleneck has left energy security “at risk,” specifically threatening the reliability, accessibility, and affordability of supply
Eastern and Southern Africa are the most exposed regions due to their high dependence on refined product imports through the Strait Landlocked countries are expected to be hit “quicker and harder” as physical buffers fade
Regulation: “An Art, Not a Science”
Drochon emphasized that downstream regulation is currently a difficult balancing act with no perfect solution . Governments are struggling to reconcile conflicting objectives, including:
* Maintaining low pump prices to curb inflation and maintain socio-political stability
* Ensuring security of supply through strategic stocks and diversified infrastructure
* Generating government revenue through taxes while providing fair returns for investors to incentivize value chain growth
Nigeria’s Relative Resilience
While the outlook for much of the continent is grim—with potential outcomes including physical shortages, black market surges, and the reintroduction of costly subsidies—Nigeria is in a “better” position than its peers .
The country’s relative safety is attributed to its large exports of crude oil, LPG, and LNG, as well as the production capacity of the Dangote refinery . However, Drochon cautioned that Nigerian consumers are not immune, as local prices for PMS and AGO remain tied to global market conditions
A Grim Forecast
S&P Global predicts a “prolonged contraction” in demand through 2026 and 2027 if the conflict persists . As supply costs rise and price thresholds are hit, the socio-economic impact—ranging from dropped tourism to higher fertilizer costs—will become increasingly severe
“Time is on nobody’s side,” Drochon concluded. “The more time passes, the more security of supply and prices will be at risk for consumers and governments alike”
