A Saudi pipeline shutdown and a tightening by the US Federal Reserve confront the continent’s economies with two shocks from far away.
Two events thousands of kilometers from the continent are weighing on its budgets and currencies this week. The first is the mid-September shutdown of Saudi Arabia’s East-West pipeline after a string of attacks. The 7-million-barrel-a-day line links the Eastern Province to the Red Sea port of Yanbu and is said to account for 30 to 40 percent of Gulf crude supply. Above all, it served as a bypass for the Strait of Hormuz, already hampered by tensions between Washington and Tehran. Brent jumped nearly 5 percent on Monday, September 14, to $109.44, before falling back to $105.83 on the 16th, with Riyadh promising to restore half its capacity shortly. According to The National, crude has gained more than 75 percent since January.
The second is the US Federal Reserve’s decision on September 16 to raise rates by 0.25 point to 3.75 to 4 percent, the first hike since July 2023, with more possible before year end. For Nigerian economist Muda Yusuf, this risks drawing portfolio capital toward the United States. A Nairametrics analysis points the same way: higher US yields are pulling investors away from frontier markets, and the naira, around 1,330 to the dollar, is struggling to appreciate despite falling inflation.
Producers enjoy a windfall, but are not immune. Nigeria’s 2026 budget was built on $64.85 a barrel, while the OPEC basket hovers around $106, which means more royalties, taxes and foreign currency inflows. Industry figures nonetheless warn that expensive crude raises refined product prices and threatens inflation, and that the Dangote refinery, which offers partial protection, would see margins squeezed by costlier feedstock. The central bank’s monetary policy committee meets on September 21 and 22 with its rate at 26.5 percent, pulled between these opposing forces.
Importers are on the front line. Since the war on Iran began in late February, several countries have raised pump prices: South Africa, Namibia, Eswatini, Egypt and Zimbabwe in the spring, while Kenya held prices through government-to-government deals with Gulf suppliers. In Pretoria, the Reserve Bank decides on Wednesday, September 23: analysts are torn between holding and a 0.25-point hike, weighing inflation above target, oil’s pressure on the rand and an economy that contracted 0.2 percent in the second quarter. Finally, the US hike raises the cost of servicing dollar debt for commodity-exporting countries, The Rio Times notes.