There is a growing push emerging within Africa’s energy circles to rethink how the continent prices its crude oil amid concerns that reliance on foreign benchmarks is exposing economies to unnecessary shocks.
Proponents of the call believe that Africa must urgently develop its own oil pricing benchmark if it is to build true resilience against global volatility.
Already, conversations are being held on how the continent with many oil-producing countries could ditch the foreign-based crude pricing benchmarks for a local one in order to build resilience.
According to the Managing Director of the Tema Oil Refinery (TOR), Edmond Kombat, who was interacting with Fellows of the Africa Extractives Media Fellowship (AEMF), for decades, African crude has been priced largely against international standards like Brent Crude and West Texas Intermediate (WTI).
These, he says, are benchmarks shaped by market dynamics in Europe and the United States. While these systems provide global reference points, Edmond Kombat believes they do not always reflect Africa’s realities.
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He cannot fathom why events far removed from Africa, like geopolitical tensions in the Middle East, determine pricing on the continent. The concern is not abstract. When crude prices surge internationally, countries like Ghana, Nigeria, and Angola, all oil producers, still feel the impact domestically through higher fuel prices, increased transport costs, and rising inflation.
“As a West African subregion, we have to have our own pricing regime and pricing benchmark. We currently price crude and petroleum products, crude especially on Brents, which is Europe-led, and then WTI. WTI is America-led,” he noted.
He adds, “Ghana is producing crude, the Ivory Coast is producing crude, Nigeria is producing crude, Angola is producing crude, Gabon, and Equatorial Guinea are producing crude. Why can’t we have a sub-Saharan African benchmark?
In essence, Africa is both a producer and a price taker. He therefore believes that establishing a sub-Saharan African pricing benchmark that reflects regional supply, demand, and risk factors will shield the continent from shocks on the global scene.
Under such a system, African crude could be priced based on local fundamentals, potentially insulating economies from sharp, externally driven price swings.
He cites that, for example, instead of crude jumping from $65 to $100 due to distant geopolitical tensions, a regional benchmark could moderate that volatility, allowing prices to move more gradually, based on African market conditions.
“You know, if you have our own reference benchmark, we will not say crude has gone to $100, because what has the war in Iran got to do here? So if you have our own price, West African or sub-Saharan African pricing benchmark, we could have still stayed around $65, plus a premium, because the benchmark’s response, based on events that are happening at certain places, so that it will even traffic back to Africa for African crude, that level of risk will not make the thing spike from $65, $70, all the way to $100,” he explained.
The implications go beyond crude oil. Refined petroleum products across Africa are also priced using international reporting agencies such as S&P Global Platts and Argus Media, which operate largely outside the continent. These benchmarks influence everything from pump prices to industrial fuel costs.
However, creating an African benchmark will not be simple. It would require coordination among major producers, including Côte d’Ivoire, Gabon, and Equatorial Guinea, as well as the development of transparent trading platforms, credible data systems, and strong regulatory frameworks.
That notwithstanding, a regional benchmark could strengthen Africa’s bargaining power in global energy markets, reduce exposure to external shocks, and create a more stable pricing environment for both governments and consumers.
It could also encourage intra-African trade in crude and refined products, aligning with broader continental integration goals.
