x Abu Dhabi, UAEFriday 28 July 2017

Upheavals in Africa threaten oil exports

Violence is on the rise again in parts of Africa, clouding the outlook for oil exports from more than one nation.

Violence is on the rise again in parts of Africa, clouding the outlook for oil exports from more than one nation.

While the armed conflict in Libya has grabbed the most attention from oil traders, the deadly election-related violence in Nigeria could threaten oil output from a second African Opec producer. Even the post-election military clash in Ivory Coast, which is not an oil exporter, could affect future supplies of prized light, sweet African crude.

This month, the Russian oil producer Lukoil suspended plans to drill several deepwater exploration wells off Ivory Coast.

The company, which drilled two such wells with its partners last year, said it would not resume operations until the violence subsided.

The Nigerian unrest is not expected to escalate into full-blown armed conflict, as in Ivory Coast, but is still of greater and more immediate concern to oil markets. Nigeria is not only the biggest African oil exporter, but is also the closest source to Europe of crude resembling the high-quality Libyan oil supplies recently disrupted by civil war there.

"More upside looks likely, as Nigeria will be front and centre with elections scheduled for the weekend," John Kilduff, a partner at the New York hedge fund Again Capital, told Bloomberg News last week.

On Friday, crude set new 30-month highs above US$113 in New York and $126 in London.

As votes trickled in yesterday, the ruling People's Democratic Party led by the Nigerian president Goodluck Jonathan appeared to be losing ground to opposition parties. A loss by Mr Jonathan's party or a significantly reduced majority could cause problems for his plans to curb the sabotage that has dogged Nigeria's oil and gas sector.

Mr Jonathan comes from the Niger Delta, the impoverished region that pumps most of Nigeria's crude. Eighteen months ago, while vice president of the country, he brokered an amnesty deal with militants, promising among other things, better access to oil sector jobs. That would entail government funding of a petroleum sector training programme for delta residents.

tcarlisle@thenational.ae