The prospect of a peace deal between the United States and Iran is boosting optimism in global financial and commodity markets. At the center of attention is the Strait of Hormuz – one of the world’s most important shipping routes and a vital artery for global oil flows.
A large portion of crude oil trade passes through the narrow corridor between the Persian Gulf and the Gulf of Oman. Any disruption pushes up energy prices, while easing tensions generally stabilizes the market.
If the agreement announced by US President Donald Trump is materialized and transit through the strait is fully reopened, Africa could be one of the main indirect beneficiaries. Lower oil prices, reduced freight costs and smoother trade flows will provide relief to economies hit by imported inflation – particularly in energy, fertilizer and food.
A potential US-Iran deal could therefore act as a comprehensive stimulus and food security package for many African countries. The biggest benefits are likely to accrue to energy and fertilizer-import dependent economies in East Africa, North Africa and the Sahel. In contrast, oil producers such as Nigeria, Angola and Algeria will benefit less.
‘Best news’ for Africa in a long time
Expectations are particularly high in East Africa, where policymakers and businesses are closely watching developments. “This is the best news for Africa in a long time,” Samuel Nyandemo, an economics professor at the University of Nairobi, told DW.
For Nyandemo, its impact will extend far beyond energy markets. “Once the route opens, we expect smooth mobility of goods and services,” he said, adding that exports to Europe and Asia could flow again without costly detours, stabilizing supply chains and cutting transportation expenses. Recent disruptions have caused freight costs to increase significantly. “Due to the disruption of this route, transportation costs have increased significantly as we now have to take very long detours.”
According to Nyandemo, East African countries have been most affected by tensions in the Gulf. “While West African countries and South Africa can rely on alternative routes, we in East Africa are primarily dependent on this route,” he said, stressing the region’s dependence, especially for energy, fertilizer and some food imports.
Dependability is enough. About 26% of Kenya’s fertilizer imports pass through the Strait of Hormuz. In Sudan, the share exceeds 50%. Globally, approximately one-third of marine fertilizer trade flows through this region.
The agricultural sector has been particularly affected. In Kenya, exporters of flowers, vegetables and other horticultural goods have faced rising costs. “We have suffered huge losses in the horticulture sector,” Nyandemo said.
At the same time, high import prices have driven widespread inflation. “When fuel prices fall, inflation slows, whether it’s in transportation, production or food.”
Energy is a central driver of inflation in many African economies. Higher diesel and gasoline prices together drive up transportation, power generation, and agricultural costs, meaning falling oil prices could translate into lower consumer prices.
Kenya: Political pressure due to high energy prices
In Kenya, rising fuel prices have already had political consequences. “The people are suffering and the president is also suffering politically,” Nyandemo said. Subsidies have put pressure on public finances while public frustration is rising. Export sectors including tea, coffee and cut flowers have also come under pressure as rerouting shipping has increased logistics costs.
Despite the optimism, Nyandemo urged caution. “We will be sure only after the agreement is officially signed.” Key details remain uncertain. For Africa’s oil-producing countries, the picture is more complex. Low global oil prices will generally reduce state revenues.
“If the Strait of Hormuz was indeed reopened, imports would become cheaper, which would be positive for consumers and businesses,” Heitor de Carvalho of Lusida University in Luanda told DW. Households will benefit from lower inflation, but the fiscal impact could be negative in the near term.
“In the case of Angola, it is mainly about oil export revenues,” de Carvalho said. Governments often benefit immediately from higher oil prices even if imports become cheaper. “Therefore, the overall impact of reopening the Strait of Hormuz will be negative in the short term.”
For millions of African consumers, the stakes go beyond geopolitics. The outcome could directly shape the affordability of fuel, bread, corn flour and fertilizer in the months ahead.
Diversifying from crude dependence
However, over time, de Carvalho sees potential benefits. “Our main problem is the excessively large role of oil revenues,” he said, adding that high crude prices could delay the recovery and create structural imbalances. This reflects the broader “resource paradox” affecting many African economies, where dependence on commodities supports short-term growth but hinders diversification.
“In the long term, we must reduce the weight of oil in our economy in favor of other sectors,” he said. He said that in the long term, the peace agreement and the reopening of the Strait of Hormuz would also be very welcome for Angola’s economy.
For most African countries, the economic logic is simple. Low oil prices reduce transportation and production costs, make fertilizers more affordable and put downward pressure on food prices. This will impact many sectors, especially countries highly dependent on Gulf supply chains. Nations in East Africa, the Horn of Africa and parts of the Sahel are particularly vulnerable to disruptions.
Energy-importing countries such as Kenya, Ethiopia and Senegal, as well as several countries in North Africa, are also likely to benefit. however, [Memorandum of Understanding] Uncertainty remains between the US and Iran, and it is unclear whether diplomatic momentum will translate into a binding peace agreement.
Edited by: Crispin Mavakideau