Africa hit by oil price free fall

By Russell Padmore

The big fall in the price of oil in recent days is hitting the economies of countries in Africa that depend heavily on income from exports of the commodity.

Members of the Opec cartel like Algeria, Angola and Nigeria are especially at risk.

The price of oil went into free fall, after Russia refused to continue its pact with Opec to reduce production, which prompted Saudi Arabia to increase output.

Brent crude oil, the benchmark traded in London, is below $40 (£31) a barrel, about 25% down on last week's price.

Algeria says a "rapid decision to balance the market" is needed, while Nigeria believes fellow Opec members might need to reconsider production cuts, because the sharp drop in prices may force the group to change strategy.

Nigeria's government has admitted state spending will have to be curbed, to account for reduced oil revenues.

The credit ratings agency Fitch, whose assessments guide how much it costs countries to borrow money, says it will reconsider its analysis of the economies of Angola, Nigeria and Gabon.

Fitch is concerned that Nigeria may spend much of its foreign reserves trying to prop up the value of its naira currency.

Its rival credit ratings group Standard & Poor's has revised its estimate on the average price of Brent crude oil, down to $40 a barrel this year.

This article originally appeared on BBC News 

Photo: Reuters