Washington, July 5 (SANA) African economies will continue to pay the price of the oil price shock caused by the war in the Middle East, despite the recent decline in prices following the interim US-Iran agreement on June 18, according to data from Oxford Economics cited by CNN Business.
The sharp rise in energy costs, driven by the closure of the Strait of Hormuz, has pushed up inflation, reduced purchasing power and increased production costs across the continent, keeping growth projections weak for 2026, the data showed.
Food inflation and monetary policy challenges
The inflation shock is not over, as higher oil and fertilizer prices worldwide continue to drive food prices upward for a longer period, particularly since food accounts for a large share of the African consumer basket, the data showed.
Africa’s fertilizer imports reached $7.2 billion in 2025, a quarter of which came from the Middle East, making the continent’s prices highly sensitive to supply disruptions or changes in transport and energy costs.
According to Oxford Economics, African central banks face difficulties containing supply-driven inflation because raising interest rates can curb demand but does not address rising production costs.
The data showed that countries including South Africa, Namibia, Mauritius and Rwanda have raised interest rates following the war, while others have kept them unchanged. The Central Bank of West African States (BCEAO) also maintained its key rate at 3% in June, despite the oil shock, to keep financing conditions supportive of economic growth.
Extended impact on growth
Although Africa’s second-quarter 2026 growth data is expected to be weaker, the full impact of higher oil prices may appear with a lag, as the shock gradually feeds into inflation rates, household purchasing power and corporate production costs.
According to Oxford Economics, even if oil prices decline later, the transmission of higher input costs and tighter financial conditions could continue to weigh on African economic activity beyond the initial price shock. A March report from Oxford Economics Africa warned that South Africa’s fragile economic recovery could face renewed strain if elevated oil prices persist, with the country’s growth forecast for 2026 at 1.6%.
The global economy has been experiencing widespread uncertainty due to geopolitical disruptions in the Middle East, particularly the intermittent closure of the Strait of Hormuz during the war, before it was reopened following the interim US-Iran agreement.
The 14-point agreement included provisions for the cessation of hostilities, the reopening of the strait and the lifting of the US naval blockade. However, the effects of the shock are expected to linger. Oxford Economics noted that even after the conflict, “full-year inflation will be higher than expected in February, while economic growth across much of the continent will be lower”.
Africa is among the regions most vulnerable to such shocks due to its heavy reliance on energy and fertilizer imports, and weak fiscal buffers in several emerging economies. The World Bank has warned that higher fuel and food prices could worsen inflation pressures, raise domestic borrowing costs and constrain already stretched fiscal positions across the continent.
Food inflation in Africa is among the highest globally due to the large weight of food items in the consumer basket, meaning any disruption in oil or fertilizer prices quickly translates into higher food prices and increased living pressures on populations.
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