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Energy

Capital Economics: oil sector problems prevent Angola from benefiting from rising prices

Consultant Capital Economics believes that the problems in oil production in Angola and Nigeria, the two largest producers in sub-Saharan Africa, will prevent these countries from benefiting from the rise in oil prices.

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"Production problems in Nigeria and Angola will likely prevent the biggest producers in sub-Saharan Africa from benefiting from the recent price recovery, but elsewhere, high prices will increase the import bill and increase pressures on inflation," wrote the Virag Forizs analyst.

In a note sent to clients, which Lusa had access to, the person responsible for analyzing the African economies described that "the price of Brent to reach 85 dollars per barrel is certainly good news for the main oil producers in the region" and pointed out that "the recent price recovery has been partially attributed to lower production from Nigeria and Angola, as both countries have struggled with production problems."

The analyst admits that these two countries "should see production increase over the next year, but that momentum will be canceled out by the drop in oil prices, so, one way or another, the problems in the sector will delay the recovery in the main African producers".

On the other hand, the rest of the region "will face higher import costs and energy costs, which increases pressures on inflation", says the analyst, illustrating with the rise in prices in South Africa, a country where the transport component it was the biggest contributor to inflation in the region's most industrialized economy.

The price of a barrel of Brent oil for December delivery broke the 86 dollars barrier today, after rising 0.72 percent from Friday's close.

The current level of oil is the highest since October 2018, when it reached 86.43 dollars, but experts do not exclude that it could reach 90 dollars a barrel before the end of the year.

Black gold has been rising for several days due to the possibility of demand increasing at a faster pace than the level of supply in the coming months.

Economies around the world are increasing energy consumption in the wake of falling demand due to the pandemic.

Last week Brent closed 0.80 percent higher than the previous Friday's closing price (84.89 dollars a barrel).

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