What does oil price dive mean for Africa?

Oil producers are paying buyers to take oil over fears that storage capacity could run out in May

The price of US oil has turned negative for the first time in history after demand plummeted due to industry and transport closing down amid the coronavirus pandemic.

It has got some excited by the prospect of free oil - or even being paid to take oil.

But Kenya-based independent oil consultant Patrick Obath says this is not the case.

“You are now seeing that the producers are not able to sell, so they are having to pay to store.

”It’s therefore not a price you can cash-in on, it is just the reality that at the moment, instead of selling a barrel, you are buying storage to keep the barrel."

Countries like Nigeria and Angola who rely on oil exports to fund their economic activities are set to be hard hit.

But Ayo Teriba, CEO, Economic Associates Nigeria says the problem may go away.

“This is only happening because of the lockdown. It is a temporary problem, and we are seeing parts of the globe lifting curfews and lockdowns. This will bring back demand in the next one or two months.”

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