As Oil Markets Ignore Middle East Conflict, Tanzania Observes: Is There a Hidden Threat?

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Yesterday, as I was passing through different news, I found one interesting matter concerning the energy sector. A short insight from Stanley Reed, A Guru Journalist in energy reports, speculated that “the oil markets did not react significantly or negatively to Iran’s attack on Israel” In an unexpected turn of events, the oil markets have shown a remarkable level of composure following Iran’s recent missile and drone assault on Israel.

This makes me wonder a few things. Isn’t Iran one of the major oil-producing countries? How come the oil market didn’t react to these attacks? Shouldn’t we expect higher oil prices in Tanzania in May 2024?

Despite the severity of the attack over the weekend, the anticipated upheaval in oil prices did not materialize. On Monday morning, April 15, the international benchmark Brent crude oil experienced a modest decline of about 1%, settling at $89.49 a barrel.

Iran is one of the world’s largest oil producers, but output is below potential due to economic sanctions. Iran’s oil production was 176.5 million tonnes in 2022, ranking it among the countries with the highest crude oil production globally.

Also, read Surging Oil Prices: Is it a Dead-end or Survival?

As they now produce 4.13 million barrels per day. US adversary Iran is producing over 4.5% of daily output. Much of Iran’s oil is conventional, meaning fancy technology is not necessary to get the most bang for their bucket of oil.

As an OPEC (Organization of Petroleum Exporting Countries) member, Iran also has some power to help influence oil prices through OPEC’s cartel actions. Assuming they do not end up entangled in a war with the US, Iran can look forward to over 90 years of production at current rates, ensuring continuing wealth for the children and grandchildren of today’s Iranians.


In 2024, the Iran–Israel proxy conflict escalated to a direct conflict between the two countries. On 1 April, Israel bombed the Iranian consulate in Damascus, killing multiple senior Iranian officials. In response, Iran and its proxies launched strikes inside Israel on 13 April.

A Surprising Calm Amidst Storm

You might find it strange, but despite the attack in the oil-rich Middle East, oil prices didn’t jump as expected. Usually, when there’s trouble in this region, we brace for price hikes because it might cut off the oil supply. But this time, it was different. The attack didn’t really harm any critical oil infrastructure or stop the flow of oil, which actually calmed the markets.

Just before the attack, oil prices had shot up over $90 (232,470/= Tshs) a barrel, fueled by traders betting on supply problems. However, since the attack didn’t impact the oil facilities as feared, the prices dropped back down to what they were before the chaos started.

What do you think? Will we see the prices climb again, or have we avoided a major spike for now?

The current oil prices aren’t following the usual rules of supply and demand. According to analysts from Goldman Sachs, there’s a risk premium, meaning oil prices include an extra $5 to $10 per barrel because of perceived risks, not because of actual supply problems. Rystad Energy, another expert group, thinks that if we only consider the basic supply and demand, Brent oil should cost about $84 a barrel.

This suggests that the market might be putting too much weight on the potential dangers from regional conflicts. Right now, things are quite tense but stable. Iran has hinted they might not escalate things further, and Israel is deciding on their next move. The market is on edge, watching every development closely, ready to respond to anything that might disrupt the oil supply.

How Much Do We Export/Import?

Tanzania relies heavily on imported petroleum products like diesel and petrol, making it sensitive to changes in global oil prices. If oil prices spike, as some experts predict they might go up to $150 (387,450/= Tshs) per barrel, it could make life harder for everyone, wouldn’t it?

This rise in prices could push up the cost of everyday items and make it more difficult for businesses to operate efficiently, potentially slowing down our economic growth.

We have to import and export oil simultaneously; we don’t produce our own oil. Oil exploration in Tanzania began in the 1950s, and since then, 23 deep test wells have been drilled, and more than 30,000 line kilometres of seismic lines have been recorded.

Although no oil has yet been discovered, one of the wells drilled in 1984 encountered an oil source rock, and surface oil seeps have been observed both in the coastal basin and in the western rift valley.

Read Related: In the Hot Seat: The Fuel Price Surge Reminds us to Invest in Renewable Energy

Currently, 116,580 square kilometres of the country are under license, representing about 55% of the total area covered by potential petroleum basins. 14 exploration and development licenses are currently covering 5 different areas across Tanzania. However, no oil discovery has been made yet.

For the past two years, Tanzania has been the world’s 117th largest exporter of Refined Petroleum, selling $61.7 million worth of the product. That year, it was also Tanzania’s 24th most exported product. The main buyers were the Democratic Republic of the Congo ($50.2 million), Zambia ($3.63 million), Uganda ($2.75 million), Kenya ($2.42 million), and Burundi ($1.38 million).

Notably, the Democratic Republic of the Congo, Zambia, and Rwanda saw the most significant growth in imports from Tanzania between 2021 and 2022.

On the flip side, Tanzania imported $5.19 billion in Refined Petroleum in 2022, making it the 54th largest importer globally and the top imported product in the country. The main suppliers were India ($2.39 billion), United Arab Emirates ($1.83 billion), Saudi Arabia ($336 million), Oman ($128 million), and South Korea ($113 million), with India, the UAE, and South Korea being the fastest-growing sources.

Still, many would like to see these trade relationships impacting our economy.

Conversely, Tanzania ranked as the world’s 105th largest exporter of Crude Petroleum, with exports valued at $962k. This product was the 236th most exported item from Tanzania, primarily going to the United Arab Emirates ($962k) and Malawi ($221). The UAE and Malawi were the fastest-growing export markets for Tanzania’s Crude Petroleum, showing significant increases from 2021 to 2022.

Regarding imports, Tanzania became the 125th largest global importer of crude petroleum in 2022, importing a total of $11k. Crude Petroleum ranked as the 1053rd most imported product in Tanzania, mainly from the United Arab Emirates ($7.52k), India ($1.41k), South Africa ($1.05k), Israel ($1k), and the United States ($27).

The fastest-growing import markets for this commodity were the UAE, India, and Israel, indicating a growing reliance on these countries for Crude Petroleum.

Price Prediction & Recommendations

Next month, assuming no significant escalation in Middle Eastern tensions and no drastic change in OPEC+ policies, prices are predicted to stabilize around $95 to $105 per barrel. However, should the conflict escalate and OPEC+ decide to cut production further, prices could spike. Tanzania must prepare for the possibility of prices reaching as high as $150 per barrel.

This would represent a substantial economic shock, requiring fiscal policy and economic planning adjustments to mitigate impacts. As the conflict unfolds, Tanzania and other oil-importing countries need to monitor market changes closely. The possibility of sudden price increases and decreases demands quick and well-informed policy actions to maintain economic stability.

Don’t Miss Out: Zanzibar’s Energy Future: Oil as a Catalyst for Development

To protect against these price swings, Tanzania should consider increasing its strategic petroleum reserves. This buffer would help soften the blow from global price shocks and keep local prices steady.

Ensuring a stable and clear policy environment for energy pricing is crucial. This involves regularly adjusting fuel prices to match global oil market trends, which helps prevent sudden price changes domestically. The current stability may be temporary, and being prepared for any shifts in market dynamics is prudent. We can’t take a brief sigh of relief but with a watchful eye that could yet influence our energy costs and economic stability.

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