<\/p>\n
Algerian authorities were thrown a lifeline after Russia\u2019s full-scale invasion of Ukraine sent energy prices soaring; now there\u2019s hope that the rise in oil prices driven by the war in Iran will offer another.<\/p>\n
The North African nation of 47 million people has long relied on some of the continent\u2019s largest oil and gas reserves to pay for many of its subsidies, and since being clobbered by the 2014 price crash, it has found it increasingly hard to fund its budget.<\/p>\n
To help cover spending \u2014 projected to rise to 7.69 trillion dinars ($58.5 billion) in 2026, around 5% more than in 2025 \u2014 the government has undertaken its first local sale of sovereign Islamic bonds and has sought to tap an African Development Bank loan for infrastructure.<\/p>\n
Then oil smashed\u00a0through $100 per barrel on March 9,\u00a0for\u00a0the first time since Russia\u2019s\u00a0invasion, and although they have yo-yoed since then,\u00a0prices remain up by more than 50%\u00a0as fears grow that the conflict will hinder supplies from the Middle East.<\/p>\n
Read: SA stocks set for a 10% correction as losses deepen
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Iran energy crisis spurs work from home calls half a world away<\/p>\n
With Algeria\u2019s budget based on an oil-market price of $70 per barrel, Minister of Hydrocarbons and Mines Mohamed Arkab has said anything between that and $80 per barrel would be \u201ca balanced price.\u201d<\/p>\n
\u201cThe rise in prices can only be a good thing,\u201d said Mahfoud Kaoubi, an independent economic and financial analyst in Algiers, the capital. \u201cWe were facing a real financing problem.\u201d<\/p>\n
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If oil shoots up\u00a0 further \u2014 closer to the $120-$125 range \u2014 the Opec producer would be able to balance its books, according to Kaoubi. Algeria currently pumps about 977 000 barrels a day.<\/p>\n
Just over 40% of planned expenditure for this year will cover allocations such as state-employee salaries, pensions, unemployment benefits and subsidies for key goods including cereals, fuel, milk and desalinated water \u2014\u00a0all seen as key to maintaining social peace.<\/p>\n
Back in 2022, when\u00a0Russian President Vladimir Putin attacked Ukraine,\u00a0Europe turned to Algeria to help secure its energy supply. It had gas to spare after diplomatic spats with Morocco and Spain over the Western Sahara territory escalated into a halting of trade and exports.<\/p>\n<\/p>\n
Algeria\u2019s foreign exchange reserves began to recover, and the country recorded trade surpluses and stronger external accounts.<\/p>\n
But the reprieve was short lived.\u00a0Foreign reserves fell\u00a0to $47.1 billion in October from more than $66 billion at the start of 2025, according to data compiled by the International Monetary Fund, which projected the funds would reach critical levels this year.<\/p>\n
\u201cUltimately, the energy price impact of the Iran war \u2013 whether it is short or long \u2013 is not a panacea for Algeria\u2019s long-term need for economic diversification away from reliance on oil and gas,\u201d said\u00a0Hamish Kinnear, a MENA analyst at Verisk Maplecroft\u2019s Global Risk Insight team.<\/p>\n
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Algeria ranks 15th out of 193 countries tracked on the thinktank\u2019s Dependence on Fossil Fuel Exports Index, which measures a country\u2019s overreliance on such revenue.<\/p>\n
\u201cThe longer-term picture for Algeria\u2019s oil and gas production alongside its domestic consumption means it is likely that more revenue raising measures will be needed in the years to come,\u201d Kinnear said.<\/p>\n
For now, as some of the pressure eases in Algiers, Kaoubi said authorities should remain prudent given threats to global inflation. Algeria imports around $50 billion a year, including food, vehicles and machinery.<\/p>\n
\u201cWhat we can get with one hand, we can lose with another,\u201d he said. \u201cThere is a risk that we see prices rise on the international market, which will impact the cost of imports.\u201d<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#Oil #barrel #promises #boon #Africas #largest #country<\/p>\n","protected":false},"excerpt":{"rendered":"
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