Oil price crash: How can Africa’s oil producers stay ahead?

Oil prices plummeted over 26% in the aftermath of failed talks in Vienna last week, as OPEC and its allies struggled to agree on production cuts. The resulting price war has left Africa's oil producers in a precarious position, with Nigeria particularly vulnerable. In a recent interview on CNBC Africa, Kola Karim, Chairman of Shoreline Group, and Usoro Essien, Head of Research at Vetiva Capital, discussed the challenges facing African oil producers and strategies for staying ahead in the current volatile market. Karim highlighted the aggressive stance taken by Saudi Arabia in ramping up oil production to cover losses in pricing, while Essien emphasized Nigeria's lack of flexibility due to its limited production capacity. Both experts agreed that the next six to eight weeks would be tumultuous for the oil and gas industry, with prices potentially dropping to $20 per barrel if current trends continue. They stressed the importance of diversifying Nigeria's oil-dependent economy by focusing on the gas sector as a potential hedge against price fluctuations. Karim underscored the need for urgent action, including budget adjustments and reducing production costs, to mitigate the impact of the crisis. Essien echoed the call for proactive measures, urging policymakers to address structural issues like the Petroleum Industry Bill and recurrent expenditure. As Africa's oil producers brace for a challenging period ahead, the key to survival lies in swift and decisive action to adapt to the evolving market dynamics.