Israeli-Iranian Escalation Disrupts Africa: Spike in Energy Prices and Erosion of Iranian Influence
By: Zaelnoon Suliman, African Affairs Unit, Progress Center for Policies
Preliminary Policy Assessment
Since the open war between Israel and Iran erupted on the 13th of this month, concerns are growing about its potential spillover into a wider regional or even global conflict. The ongoing missile exchanges, targeting critical civilian and military infrastructure in both countries, are already reverberating across the African continent. This preliminary assessment seeks to explore the economic and diplomatic ramifications of the war on African nations.
Key Economic Impacts
Commodity Price Surges:
Reliable sources report that most African countries have experienced a sharp rise in gold prices—up 1% to over $3,420 per ounce, the highest level in nearly two months. Crude oil prices also soared following Israeli strikes on Iran. Brent futures rose by over $4 a barrel, a 5.8% increase, reaching $73.38 per barrel. Analysts warn that further escalation—particularly if oil infrastructure or shipping lanes are disrupted—could push global oil prices up by 7–11%, surpassing $80 per barrel, with severe implications for African economies dependent on energy imports.
Gas Supply Disruption to Egypt:
Exports from Israel’s Tamar and Leviathan gas fields have halted, negatively affecting Egypt. As a major recipient of Israeli gas, Egypt faces potential revenue losses. Within days of the war’s onset, the Egyptian stock market recorded its steepest drop in five years. Investor fears over regional instability, combined with a sharp decline of the Egyptian pound below 50 per USD, are fueling inflation. Key impacted sectors include:
Energy (gas supply cuts)
Tourism (security concerns)
Trade (rising insurance premiums and ship diversions away from the Red Sea and Suez Canal)
South Africa’s Market Reaction:
South Africa has also felt the pressure, with its currency weakening and yields on long-term sovereign bonds (notably 2035 bonds) increasing by approximately 16.5 basis points, signaling heightened market risk.
East Africa’s Supply Chain Exposure:
Higher oil prices and potential disruptions at the Strait of Hormuz or the Red Sea trade routes pose a serious threat to fragile economies in Sudan, Ethiopia, and Somalia. These nations, already burdened by conflict, could face inflationary shocks in food and fuel imports.
Security Implications
Despite geographical distance, the conflict’s ripple effects may include:
Proxy movements of Iran- or Israel-backed armed groups, particularly in the Horn of Africa and the Sahel.
Possible increase in militant activity or terrorist threats in Somalia, Ethiopia, or other vulnerable regions.
Geopolitical & Diplomatic Ramifications
Erosion of Iranian Influence:
Iran’s regional outreach could face significant setbacks. The late President Ebrahim Raisi made a rare diplomatic tour in July 2023—visiting Kenya, Uganda, and Zimbabwe—to expand Tehran’s developmental partnerships across Africa. These efforts now risk unraveling.
Key Partnerships at Risk:
Kenya, Iran’s second-largest African trade partner, has longstanding trade centered on Kenyan tea and Iranian petroleum/chemicals.
Burkina Faso under Capt. Ibrahim Traoré, having expelled French forces, has cultivated closer military and economic ties with Iran.
Niger also saw deepening political and commercial ties with Tehran—now under greater scrutiny.
Sudan as a Battleground for Influence:
Iran had re-engaged with Sudan’s Port Sudan-based government, allegedly supplying drones and technical support. With Israel now targeting Iranian military assets globally, Sudan may lose critical military support—narrowing its strategic options and potentially isolating its regime.
Israel’s Position in Africa
Several African states—such as Kenya, Uganda, Ethiopia, Nigeria, Rwanda, Ghana, and Zambia—maintain robust security and technological ties with Israel. Ethiopia, in particular, shares deep military cooperation with Tel Aviv. As conflict intensifies:
Israel may increase aid and outreach to friendly African nations.
It will likely campaign diplomatically to curb Iranian influence and galvanize support against Tehran.
Continental Diplomatic Reactions
Divided African Response:
The African Union called for immediate de-escalation and dialogue.
South Africa, Algeria, Tunisia, and Sudan condemned Israel’s actions as violations of international law.
Nigeria and Ghana urged restraint without directly blaming either side.
Egypt expressed concern over the impact on the Suez Canal and energy security.
This divergence suggests a potential reshaping of alliances as African nations balance economic interests with ideological leanings.
Outlook:
Should the war prolong or escalate:
Africa’s economic vulnerabilities—especially in energy and trade—will deepen.
The diplomatic balance between pro-Iran and pro-Israel states may shift.
Armed proxy activity in unstable African regions may increase.
Both Israel and Iran are likely to intensify their efforts to win allies across the continent, setting the stage for a new phase of geopolitical competition in Africa.
