Middle East Crisis Hits African Growth and Oil Markets
Bloomberg's Horizons Middle East & Africa program recently highlighted two major concerns for the region: the stalled US-Iran talks and the Brent crude price nearing $90 per barrel.
The energy market is on edge due to conflict fears, pushing Wall Street lower while energy prices surge. However, a physical market analysis reveals that global physical crude markets are mired in discounts as Middle Eastern producers ramp up supply, making Gulf grades cheaper against Brent and creating an arbitrage window for majors such as Exxon Mobil, Eni, and TotalEnergies.
The African Development Bank warns that the Middle East crisis could cost Africa 0.2 percentage points of economic growth in 2026, with chief economist Kevin Urama cautioning that this estimate holds only if the war does not exceed three months. East Africa's growth is projected to decline from 6.6 percent in 2025 to 5.9 percent in 2026 due to supply-chain pressure.
Market analysts are watching how long the paper-physical split can hold, with discounts on Gulf grades usually narrowing when geopolitical fear becomes physical disruption.