Profits from rising oil and gas prices for developing world producers, including Nigeria, are likely to be short-lived, the head of the United Nations trade agency said yesterday.
The warning followed rising concerns over the negative aftermath of the ongoing Iran war, which has led to higher shipping costs due to closure of the Hormuz Straits, reports AFP.
Pamela Coke-Hamilton, executive director of the International Trade Centre (ITC), told Reuters during an interview that oil and gas could be secured from other places, so the situation was “not as dire” even if price hikes were a problem.
What the ITC is pointing out is a subtle but important distinction: while higher crude oil prices can boost revenues for countries that export raw oil (like Nigeria, Angola, Libya, and Brazil), the benefits are capped because most of them still rely heavily on importing refined petroleum products such as gasoline and diesel. Kazakhstan is the exception here, since it has more refining capacity relative to its domestic needs, allowing it to capture more of the value chain.
On the natural gas side, countries like Algeria, Malaysia, Turkmenistan, and Azerbaijan stand to gain from higher prices. However, the ITC notes that supply expansion is constrained in the short term—building out new pipelines, LNG terminals, or production facilities takes years, not months. So while revenues may rise, the ability to scale exports quickly is limited.
In essence, the report highlights a structural challenge: resource-rich countries often benefit from price spikes, but unless they have strong downstream industries (refining, petrochemicals, LNG infrastructure), those gains remain partial. It’s a reminder that energy wealth isn’t just about extraction—it’s about how much of the value chain a country controls.
