Energy Geopolitics from Hormuz to Lagos: Commodity Shocks and African Vulnerability

In this analysis, Dr. Oludele Solaja examines how geopolitical tensions around the strategic oil chokepoint of the Strait of Hormuz transmit economic shocks across the global political economy and disproportionately affect African states. Because many African economies remain highly dependent on commodity exports and imported energy, oil price volatility quickly translates into inflation, fiscal stress, and social pressure. Even oil-exporting countries such as Nigeria face paradoxical effects, benefiting from higher crude revenues while simultaneously suffering from rising domestic fuel costs. These inflationary pressures can fuel economic discontent, weaken government legitimacy, and create fertile ground for populist mobilization. Dr. Solaja argues that recurrent commodity shocks expose deep structural vulnerabilities, underscoring the need for economic diversification, energy transition, and stronger regional integration to build resilience.

By Oludele Solaja*

Geopolitical conflicts rarely stay within their battlefield boundaries. In a world with integrated economy, war in strategic energy corridor would swiftly lead to inflation, political instability and governmental pressures far from conflict. Geopolitical tensions in the strategic energy corridor are central to the functioning of the global political economy. The Strait of Hormuz holds a peculiar important position in the transit routes among all. Some one fifth of the global petroleum liquids passes through the narrow maritime passage in between Iran and Arabian Peninsula (US Energy Information Administration, 2023), hence the perception of armed conflict even if it’s just the rumor of one in the area would lead to an immediate volatility shock in the global oil market.

Not just the physical supply disruptions but the uncertainty itself would create price volatility. Higher cost of insuring the vessels, shifting of the routes and market responses all contribute to the volatility as well. Scholars of energy politics have always acknowledged that oil markets are intrinsically connected with national security and strategic rivalry (Bridge & Le Billon, 2017). As such, conflict occurring in energy producing areas could have economic impact across nations without any boundaries.

The effects on the developing nations would be even worse. World Bank warns that such shocks from the Middle Eastern energy supply chains could push the oil prices beyond $100/barrel, creating inflation pressure and fiscal burden upon developing nations. In an integrated global economy, a geopolitical shock will be transmitted across the commodity supply chain. Energy supply, food production, transportation network and capital flow are all interconnected.

Inflation Transmission and African Political Economy

When energy prices shock happens in African countries, typically there are two related effects: windfall profit to oil exporters, and inflationary pressure to domestic markets.

On one hand, oil exporters like Nigeria, Angola and Algeria could profit from rising crude oil prices through high export revenues and balance of payments surplus. In theory, windfalls can stabilize fiscal conditions and support increase development expenditure. Nevertheless, political economy literature argues that commodity windfalls often reproduce and strengthen existing vulnerabilities of the economies, which fail to transform into sustainable development instead of generating rent-seeking behavior without firm institutions and diversified economies (Auty, 2001; Ross, 2012).

On the other hand, rising global oil prices will transmit inflation through the domestic economies. Transportation costs rise with higher fuel prices, pushing the price up of goods including foods, which need logistics and transportation, as well as costs for manufactured goods and fertilizers for farming. Electricity costs are also higher and so forth.

In Nigeria, this paradox is crystal clear. Despite being one of Africa’s biggest exporters of crude oil, Nigeria needs to import its supply of refined petroleum products as its own refining capacity is insufficient. This creates two divergent effects at the same time: Nigeria has to pay high fuel import costs from imported refined oil, while export revenue is expected to rise with higher crude prices. Informal sector workers who are in the vast majority in Nigerian labor market would experience increasing cost of living.

The consequences for oil-importing African countries are even harsher. Rising costs of fuel import not only leads to greater trade deficit and depreciation of national currency but also increase countries’ exposure to sovereign debt distress.

Commodity Shocks and Politics of Economic Discontent

The macroeconomic impact beyond energy sector can reshape the domestic political landscape by raising costs of living especially in the vulnerable societies. Political scientists have noted that a sudden increase in living costs can cause popular unrest, weaken government legitimacy, and contribute to the emergence of populism (Rodrik, 2018; Kriesi & Pappas, 2015).

In this case, a global economic shock would have translated into domestic political pressure. When confronting with inflation pressures, African governments often are compelled to subsidize the consumption of oil or enforce price caps, which have proven to undermine fiscal positions and postpone necessary structural adjustments. Repeated commodity shocks in institutionally weak economies can reproduce the same vicious cycles of economic discontent and political instability.

Geopolitical conflicts in energy corridors therefore do more than creating turbulence for economies. They challenge domestic political legitimacy by accentuating conflicts between different strata of society about inflation, social welfare, and commodity distribution.

Structural Vulnerability in Commodity-dependent Economies

All of the aforementioned highlights the inherent structural vulnerabilities of commodity-dependent economic systems. Dependency theorists have consistently asserted that countries that depend on exports of primary commodities are exposed to volatility in international commodity markets (Frank, 1967; Amin, 1976). Moreover, the "resource curse" debate emphasizes rent seeking, volatility, and limited industrial development in extracting economies (Ross, 2012).

Energy geopolitical shock can only intensify this vulnerability. Shipping disruptions or higher freight costs resulting from higher insurance fees due to conflict at Persian Gulf can be re-routed around Africa’s Cape of Good Hope, further intensifying the costs borne by all importing nations, especially those relying on food imports, manufactured goods and agricultural inputs. In such cases, the impacts of wars fought at energy corridors are redistributed across the commodity markets that link the Strait of Hormuz to consumers across a faraway land.

Policy Implications: Building Resilience

Mitigating vulnerability of geopolitical commodity shocks requires a long-term perspective beyond ad hoc management strategies. The first thing for African countries is to speed up economic diversification (industrialization and value adding in agriculture), because it will lead to sustainable development not only by reducing dependence on the exports of oil. Secondly, investment in infrastructure and on renewable energies will lead to energy sustainability in African countries and reduces the reliance on imported refined goods. Third, strengthen the social safety net (cash transfers, food security program, etc.) can shield the poorest households from inflationary shocks. Fourth, expand intra-African trade using the African Continental Free Trade Area (AfCFTA) will make the region reduce dependence on unstable international commodity market.

Conclusion

Volatility in strategic energy corridors such as the Strait of Hormuz is a manifestation of geopolitical tensions’ spread across the global political economy. For Africa’s commodity-dependent economies, it amplifies the persistent structural vulnerabilities that are embedded in extraction-based development strategies. Short term export gains associated with rising prices rarely outweigh the subsequent inflationary pressures and fiscal instability in the longer run. Unless these development strategies are actively reformed to emphasize diversification, energy transition and resilience, each commodity shock following every conflict will result in the similar outcomes: temporary windfall gains followed by inflation-induced hardship and fragile development. Geopolitical conflicts in energy corridors, hence, are not just regional security issues; they are fundamentally tests of structural resilience in the development agenda of the Global South.

(*) Dr. Oludele Solaja is a faculty member in the Department of Sociology at Olabisi Onabanjo University in Ago-Iwoye, Ogun State, Nigeria.

References

Amin, S. (1976). Unequal development: An essay on the social formations of peripheral capitalism. Monthly Review Press.

Auty, R. (2001). Resource abundance and economic development. Oxford University Press.

Bridge, G., & Le Billon, P. (2017). Oil. Polity Press.

Frank, A. G. (1967). Capitalism and underdevelopment in Latin America. Monthly Review Press.

Kriesi, H., & Pappas, T. (2015). European populism in the shadow of the Great Recession. ECPR Press.

Rodrik, D. (2018). “Populism and the economics of globalization.” Journal of International Business Policy, 1(1–2), 12–33.

Ross, M. (2012). The oil curse: How petroleum wealth shapes the development of nations. Princeton University Press.

U.S. Energy Information Administration. (2023). World oil transit chokepoints. https://www.eia.gov

World Bank. (2023). Commodity markets outlook. World Bank.