Early Impacts of COVID‐19 Pandemic on the Crude Oil Prices and Demand in Sub‐Saharan Africa: A Review

Abstract

In March 2020, the World Health Organization (WHO) proclaimed the novel coronavirus 2019 (COVID‐19) a global pandemic with no therapy/vaccination or universally accepted therapeutic modalities. This resulted in the implementation of containment measures such as lockdowns, which hindered economic activities and, as a result, hampered global demand, consumption, and product transportation. The global crude oil supply chain was one of the most affected. As a result, this study was done to examine the effects of COVID‐19 on global crude oil markets and its consequences in sub‐Saharan Africa (SSA), using Kenya and Tanzania as case studies. Preferred Reporting Items for Systematic Reviews and Meta‐Analysis (PRISMA)‐based content analysis approaches were utilized to analyze data from multiple sources, and the COVID‐19‐induced oil price crisis was compared to previous global crude oil gluts from 1970 to 2020. It has been determined that global crude oil prices dropped by 65.96% from around $69.25/barrel in January 2020 to $23.57/barrel in June 2020, with West Texas Intermediate (WTI) reaching −$36.98/barrel in March 2020 (one of the highest in recent times). As a result, petroleum prices in Kenya and Tanzania fell by 30%. This, however, did not result in long‐term energy price stability in the SSA due to a lack of logistical and storage capabilities. More research on energy storage, consumption, analysis, modeling, and preparedness for COVID‐19‐like disasters are suggested.