As war premiums hit groceries, China deals give Africa room to breathe

The first tankers that turned away from the Strait of Hormuz did not just redraw shipping maps. They redrew grocery lists, too. After Iran’s partial closure of the strait disrupted a chokepoint that carries roughly 20 per cent of the world’s oil, traders priced in something they know too well: war is not only about missiles; it’s about the bill that lands on kitchen tables months later.

Brent crude climbing back above US$100 a barrel, and touching roughly US$120 on the worst days, is already more than a market headline, affecting the diesel at the pump, the bread in the oven and the fertiliser on a field. Even if forecasts indicate that Brent will average closer to US$90 in the second quarter, the risk premium is already present.

For wealthier economies, this may look survivable. For much of the Global South, it feels more like a stress test. Currencies are weak, reserves are thin and debts are heavy. In net importers such as Kenya, Senegal or Bangladesh, every US$10 rise in crude quickly narrows subsidy space, lifts freight costs and hardens urban food inflation.

We often talk about oil as if it sits in a separate universe from food. In reality, they are closely linked. Food and Agriculture Organisation (FAO) figures showed the global food price index rising in February for the first time in five months, with cereals and vegetable oils leading the rebound. The UN agency logged a second consecutive monthly increase as energy-linked costs affected food prices in March.

Fuel prices drive the cost of moving grain, running irrigation pumps and producing fertiliser. When energy becomes more expensive, the cost structure of a bakery in Lagos or a maize mill in Bamako shifts quickly.

Global averages hide the harsher story. The FAO’s food price monitoring kept flagging stubbornly high cereal prices in parts of East Africa and markets affected by conflict. In Somalia, Sudan and South Sudan, and across fragile stretches of the Sahel, staples can trade at levels that feel closer to siege economics than normal volatility.

South China Morning Post