ГОЛОВНЕ

Russia’s invasion of Ukraine, and the sanctions that followed, has pushed the price of oil to over $100 per barrel, the highest level in eight years. But, it’s also opened an opportunity for African oil producers like Nigeria, Angola, Libya, and Algeria to cash in with more crude oil exports. But a lack of refineries in Africa means crude oil exporters will also have to pay more for imported fuels.

The Brent crude oil prices hit $105 per barrel last week, it’s highest mark since 2014 and up by 47% since December, amid fears that supplies from Russia may be impacted by crisis.

Russia accounts for a significant amount of the world’s total crude oil output between 25-30% making it the second highest producer globally.

But experts say the crisis and sanctions slammed on Russia by Europe and America could significantly impact demand for Russian products and tip the odds in Africa’s favor.

“For Africa it’s a gain, it’s an opportunity, it presents that window of opportunity for African countries to see how they can increase their production capacity and meet the need of global demands of crude oil,” says Isaac Botti, a public finance expert.

However, Africa’s production combined accounts for less than a tenth of total global output. Nigeria is Africa’s largest producer of oil followed by Libya. Other notable producers are Algeria and Angola.

Experts predict oil prices will rise further but worry Nigeria could be facing a backlash.

“At the end of the day it’s going to hit on our economy. We may think that we’ll gain but remember we don’t refine out crude oil,” said economic analyst Paul Enyim.

Nigerian refineries have been shut down for about one year. The country depends on imports to meet it’s energy needs. Experts say prices paid for imported will also increase.

Authorities are also grappling with huge subsidies to keep pump price of oil products within affordable limits.

Last week Nigeria’s minister of state for Petroleum said authorities were not comfortable with the surge in prices of crude oil.

But this week, Algerian state-owned oil and gas giant said it would supply Europe if Russian exports dwindled as a result of the crisis.

Botti says it’s a good example for other African nations.

“We need to develop our capacity to produce locally, we need to look at various trade agreements that are existing,” he said.

For years African oil producers including Nigeria have been struggling to meet required daily output levels.

Experts however worry African producers may struggle to fit into the big market with increasing global demands for crude oil.

For weeks, Nigeria has been battling to normalize fuel supply in the country after authorities recalled millions of liters of adulterated petrol from circulation causing a major shortage in West Africa’s most populous nation.

As the crises between Russia and Ukraine lingers, experts say the shifting focus on Africa could be both a blessing and a burden.
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Ordinary Russians faced the prospect of higher prices and crimped foreign travel as Western sanctions over the invasion of Ukraine sent the ruble plummeting, leading uneasy people to line up at banks and ATMs on Monday in a country that has seen more than one currency disaster in the post-Soviet era.

The Russian currency plunged about 30% against the U.S. dollar Monday after Western nations announced moves to block some Russian banks from the SWIFT international payment system and to restrict Russia’s use of its massive foreign currency reserves. The exchange rate later recovered ground after swift action by Russia’s central bank.  

People wary that sanctions would deal a crippling blow to the economy have been flocking to banks and ATMs for days, with reports in social media of long lines and machines running out.  

Moscow’s department of public transport warned city residents over the weekend that they might experience problems with using Apple Pay, Google Pay and Samsung Pay to pay fares because VTB, one of the Russian banks facing sanctions, handles card payments in Moscow’s metro, buses and trams.  

A sharp devaluation of the ruble would mean a drop in the standard of living for the average Russian, economists and analysts said. Russians are still reliant on a multitude of imported goods and the prices for those items are likely to skyrocket. Foreign travel would become more expensive as their rubles buy less currency abroad. And the deeper economic turmoil will come in the coming weeks if price shocks and supply-chain issues cause Russian factories to shut down due to lower demand.  

“It’s going to ripple through their economy really fast,” said David Feldman, a professor of economics at William & Mary in Virginia. “Anything that is imported is going to see the local cost in currency surge. The only way to stop it will be heavy subsidization.”

The Russian government will have to step in to support declining industries, banks and economic sectors, but without access to hard currencies like the U.S. dollar and euro, they may have to result to printing more rubles. It’s a move that could quickly spiral into hyperinflation.  

The ruble slide recalled previous crises. The currency lost much of its value in the early 1990s after the end of the Soviet Union, with inflation and loss of value leading the government to lop three zeros off ruble notes in 1997. Then came a further drop after a 1998 financial crisis in which many depositors lost savings and yet another plunge in 2014 due to falling oil prices and sanctions imposed after Russia seized Ukraine’s Crimea peninsula.

Russia’s central bank immediately stepped in to try to halt the slide of the ruble. It sharply raised its key interest rate Monday in a desperate attempt to shore up the currency and prevent a run on banks.  

The bank hiked the benchmark rate to 20% from 9.5%. That followed a Western decision Sunday to freeze Russia’s hard currency reserves, an unprecedented move that could have devastating consequences for the country’s financial stability.  

It was unclear exactly what share of Russia’s estimated $640 billion hard currency pile, some of which is held outside Russia, would be paralyzed by the decision. European officials said that at least half of it will be affected.

That dramatically raised pressure on the ruble by undermining financial authorities’ ability to support it by using reserves to purchase rubles.  

Kremlin spokesman Dmitry Peskov described the new sanctions that included a freeze on Russia’s hard currency reserves as “heavy,” but argued Monday that “Russia has the necessary potential to compensate the damage.”

The central bank ordered other measures to help banks cope with the crisis by infusing more cash into the financial system and easing restrictions for banking operations. At the same time, it temporarily barred non-residents from selling the government obligations to help ease the pressure on the ruble from panicky foreign investors trying to cash out of such investments.  

The steps taken to support the ruble are themselves painful since raising interest rates can hold back growth by making it more expensive for companies to get credit.

The ruble sank about 30% against the U.S. dollar early Monday but steadied after the central bank’s move. Earlier, it traded at a record low of 105.27 per dollar, down from about 84 per dollar late Friday, before recovering to 98.22.

Sanctions announced last week had taken the Russian currency to its lowest level against the dollar in history. 
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BP said Sunday it is exiting its share in Rosneft, a state-controlled Russian oil and gas company, in reaction to Russia’s invasion of Ukraine.

BP has held a 19.75% stake in Rosneft since 2013. That stake is currently valued at $14 billion.

London-based BP also said its CEO, Bernard Looney, and former BP executive Bob Dudley will immediately resign from Rosneft’s board.

“Like so many, I have been deeply shocked and saddened by the situation unfolding in Ukraine and my heart goes out to everyone affected. It has caused us to fundamentally rethink BP’s position with Rosneft,” Looney said in a statement.

Rosneft said it was informed of BP’s decision Sunday. 

“BP has come under unprecedented pressure from both the regulator and its shareholders. BP’s decision was preceded by a Western media campaign full of false reports and conclusions,” Rosneft said in a statement on its website that was translated by The Associated Press. “The decision of the largest minority shareholder of Rosneft destroys the successful, 30-year-long cooperation of the two companies.”

BP Chairman Helge Lund praised the “brilliant Russian colleagues” BP has worked with for decades, but said Russia’s military action “represents a fundamental change.”

“The Rosneft holding is no longer aligned with BP’s business and strategy and it is now the board’s decision to exit BP’s shareholding in Rosneft,” Lund said in a statement.

BP’s action was an abrupt turnaround from earlier this month. During a conference call with investors on Feb. 8, Looney downplayed concerns and said there were no changes to the company’s business in Russia.

“Let’s not worry about things until they happen. And who knows what’s going to happen?” Looney said.

Kwasi Kwarteng, the U.K.’s secretary of state for business and energy, said he welcomed BP’s decision.

“Russia’s unprovoked invasion of Ukraine must be a wake up call for British businesses with commercial interests in Putin’s Russia,” Kwarteng said in a tweet.

BP said it will take two non-cash charges in the first quarter to reflect the change, including an $11 billion charge for foreign exchange losses that have accumulated since 2013.

It is not clear exactly how BP will unwind its holdings, or who might step up to buy them. 

Rosneft’s partnerships with Western oil and gas companies have been stymied before.

In 2011, Exxon Mobil, led at the time by future U.S. Secretary of State Rex Tillerson, signed a deal with Rosneft to potentially drill in the oil-rich Russian Arctic. But Exxon ended that partnership in 2017, citing U.S. and European sanctions against Russia.
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The U.S. is revisiting cutting Russia from the global bank-to-bank payment system known as SWIFT, as the next step in a series of escalating sanctions punishing Moscow for the unprovoked invasion of Ukraine.

U.S. President Joe Biden initially held back on this crucial step that would isolate Russia on the world stage and have a serious impact on its economy, due to the concerns of European allies. But those concerns appeared to be eroding Saturday as Russian forces moved to encircle the Ukrainian capital of Kyiv.

Ukraine has lobbied for a SWIFT ban on Russia, urging Europe to act more forcefully in imposing sanctions against Moscow. However, some European nations, including Germany, are hesitant to take that step.

 

British Prime Minister Boris Johnson called Friday for nations to cut off Russia from the SWIFT international bank transfer system “to inflict maximum pain.”

Luxembourg Foreign Minister Jean Asselborn said “the debate about SWIFT is not off the table, it will continue.”

Putin, Lavrov sanctioned

The United States announced Friday that it would freeze the assets of Russian President Vladimir Putin and Russian Foreign Minister Sergey Lavrov, following similar steps taken by the European Union and Britain, as nations around the world sought to tighten sanctions against Russia’s government over its invasion of Ukraine.

The U.S. Treasury Department announced the action Friday after EU foreign ministers meeting in Brussels unanimously agreed to freeze the property and bank accounts of the top Russian officials.

Britain’s government took the same action Friday, with Foreign Secretary Liz Truss writing on Twitter, “We will not stop inflicting economic pain on the Kremlin until Ukrainian sovereignty is restored.”

White House press secretary Jen Psaki said the move by the U.S., the European Union and Britain sends “a clear message about the strength of the opposition to the actions” by Putin.

Juan González, the National Security Council Senior Director for Western Hemisphere Affairs, told VOA, the sanctions were designed to apply global pressure on Russia.

“If you see the sanctions on 13 financial institutions, among the largest in Russia, that will have an impact with any government or business that has agreements with these institutions. But also, a lot of this money laundering and governments that operate outside the financial system international will feel the squeeze,” Gonzalez said.

Russian foreign ministry spokeswoman Maria Zakharova said the sanctions against Putin and Lavrov reflect the West’s “absolute impotence” when it comes to foreign policy, according to the RIA news agency.

World leaders are rarely the target of direct sanctions. The only other leaders currently under EU sanctions are Belarus President Alexander Lukashenko and Syrian President Bashar al-Assad, according to Agence France-Presse.

Austrian Foreign Minister Alexander Schallenberg said the move is “a unique step in history” toward a country that has a permanent seat on the U.N. Security Council but said it shows how united EU countries are in countering Russia’s actions.

The EU sanctions against Putin and Lavrov are part of a broader sanctions package that targets Russian banks, oil refineries and Russia’s defense industry.

EU leaders agreed, however, it was premature to impose a travel ban on Putin and Lavrov because negotiating channels need to be kept open.

German Foreign Minister Annalena Baerbock said Friday the package of banking sanctions the EU has passed would hit Putin’s government harder than excluding Russia from the SWIFT payments system.

“The sword that looks hardest isn’t always the cleverest one,” she said, adding, “the sharper sword at the moment is listing [the] banks.”

In response to the sanctions, Russia has taken its own measures, including banning British flights over its territory, after Britain imposed a similar ban on Aeroflot flights.  

The United States and several allies had imposed a first tranche of sanctions Tuesday, after Putin declared the disputed eastern Ukraine regions of Luhansk and Donetsk as independent states, much as he appropriated Ukraine’s Crimean Peninsula in 2014.

President Biden added another round of sanctions on Russia Thursday, hours after Russia began its invasion of Ukraine, declaring at the White House after meeting virtually with leaders of the G-7 nations and NATO that “Putin chose this war, and now he and his country will bear the consequences.”

Biden said the new U.S. sanctions, which target Russian banks, oligarchs and high-tech sectors and include export controls, will “squeeze Russia’s access to finance and technology for strategic sectors of its economy and degrade its industrial capacity for years to come.”

NATO allies, including Britain and the European Union, also imposed more sanctions Thursday, and the effects were felt almost immediately when global security prices plunged and commodity prices surged. Biden acknowledged that Americans would see higher gasoline prices.

Also Friday, an International Criminal Court prosecutor warned that the court may investigate whether Russia has committed any possible war crimes, following its invasion of Ukraine.

“I remind all sides conducting hostilities on the territory of Ukraine that my office may exercise its jurisdiction and investigate any act of genocide, crime against humanity or war crime committed within Ukraine,” ICC prosecutor Karim Khan said Friday in a statement.

Some information in this report came from The Associated Press, Agence France-Presse and Reuters.
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