Oil Price Crash Destabilizes Africa, Middle East
When Russia and Saudi Arabia triggered an oil price war on March 6 by refusing to cut production, they started a process which could transform the Middle East, Africa and, eventually, the world.
On February 20, the price of Brent Crude, a common benchmark for oil prices, peaked at $58.80 a barrel. Throughout March, as the oil war between Russia and Saudi Arabia heated up, prices dropped to as low as $26.69. From then on, the price declined to record lows, reaching $19.33 on April 21. On the same day, United States oil prices fell to negative territory. In Canada, oil from the province of Alberta was selling for less than a cup of coffee.
This decline has especially hurt poorer oil-producing nations that were already too reliant on the commodity. The World Bank predicts that economic growth in Sub-Saharan Africa will fall to –5.1 percent by the end of 2020. “The oil slump could not have come at a worse time for African countries. They are too dependent on oil for revenue,” stated an energy consultant based in Angola.
An oil shortage affects the world’s highest consumers most of all, but overproduction does the opposite. It drives down the price and decreases demand, hitting high producers hardest. Many of these nations and their regimes rely on oil for survival. When the economy falls apart amid a price crash, riots often follow, allowing terrorists to exploit the chaos.
Several African and Middle Eastern countries are in danger of this right now. As America withdraws and unrest grows, a new power will be forced to fill the void.
Algeria normally produces almost 1.7 million barrels of oil per day; it is the third-largest oil producer in Africa. Oil accounts for 95 percent of its exports, or 60 percent of the state budget. Before the price crash, it had a surge in debt. In 2017, total public debt stood at 26 percent. At the end of 2019, it had reached 45 percent—before the worst of the oil crisis hit. On May 3, Algerian President Abdelmadjid Tebboune announced the national budget would be cut by 50 percent this year. In an effort to avoid unrest, his government also raised the minimum wage from $140 per month to $155.56, and waived income tax for low earners. Whether these measures will be enough to quell unrest remains to be seen.
“In the short term, Algeria can resist the consequences of what is happening on the oil market. … But this exceptional situation requires urgent structural, economic and financial reforms,” a member of the Parliament’s finance committee told Reuters.
“Algeria no longer has the choice of delaying economic reforms. They are going to be difficult to implement, but this is the time to diversify the economy,” said a former Algerian energy minister. Reforms would tighten already difficult living conditions in the country, possibly leading to riots.
The situation is precarious because President Tebboune does not have widespread support. His election was seen as illegitimate, with low turnout. He was only elected after the country’s largest protests since the Arab Spring ousted longtime President Abdelaziz Bouteflika. More protests could bring another change in leadership, and another opportunity for radical Islam.
Terrorists are poised on the southern and eastern borders, ready to take advantage of internal chaos. Al Qaeda in the Islamic Maghreb has posed a persistent threat since 2007, carrying out over 600 terrorist attacks to date.
“Algeria has a long history of combating domestic violent extremism,” wrote the Counter Extremism Project. “Beginning with the outbreak of the Algerian Civil War in 1992, the government has worked to quash militant Islamist groups operating within in its borders, including the Armed Islamic Group (gia) and the Salafist Group for Preaching and Combat (gspc), among others.” After the Arab Spring, Algeria once again began to experience an increase in violence, proving that the forces of radical Islam never went away.
A cash-starved government, unable to maintain a level of social spending that the population is used to, could leave the door open to an Islamist revival.
Nigeria is Africa’s largest oil producer. This accounts for 9 percent of its gross domestic product, 60 percent of its revenue, and 90 percent of its foreign exchange. It now faces an “existential threat,” according to the Wall Street Journal. When the crisis hit, the Nigerian economy had not recovered from a 2014 price crash. Goldman Sachs estimates the country will lose more than $9 billion as oil prices continue falling. Nigeria’s 2020 budget had been based on oil selling for $57 a barrel. Now, the best it hopes for is $30 per barrel. It will take in 45 percent less revenue than planned. Oil producers in Nigeria already contend with the highest break-even point in the world due to government corruption and high refining costs.
As overproduction floods the market, storage capacity is running out. Nigerian oil companies are racing to access and fill the last remaining tankers at sea.”When there’s no more vessels to load the crude, then the entire world collapses,” said Kola Karim, the chairman of Nigeria’s third-largest oil producer. “You will have serious, serious security implications. Unrest.”
According to Energy Industry Review, unemployment could rise by approximately 25 percent. That’s in addition to 20 million people already unemployed.
These economic woes will likely have severe effects on everyday life. Inflation and currency devaluation could make essential products nearly impossible to afford. This is a recipe for social unrest and potentially even the overthrow of the government. Boko Haram has sought exactly that outcome from its inception in 2002. Since it began regular attacks in 2009, its members have killed 30,000 people. It would be sure to take advantage of anger against the government to achieve its aim of toppling Nigerian President Muhammadu Buhari and establishing a caliphate.
Oil accounts for 95 percent of Iraq’s budgetary income, and the country is ranked sixth in the world, producing 4.4 million barrels daily. Consequently, it has been one of the hardest hit by the oil crash. Revenue from oil has decreased by nearly half, going from $5.5 billion for 98 million barrels produced down to not quite $3 billion for 105 million barrels.
Nearly 1 in 10 Iraqis works in state-owned agencies, where the vast majority of income is derived from oil. Energy Industry Review wrote that “the pandemic effectively closed the Iraqi private sector economy” from March onward. Iraq does not have nearly enough money in reserve to deal with the crisis. Like Nigeria, Iraq now faces “a potentially existential threat.”
The country has been without a head of government for six months, and it only agreed on a prime minister on May 7. In the interim, Islamic State militants exploited the chaos, increasing attacks: These doubled in April, reaching 113, compared to an average of 49 the previous three months. Added to this, the United States is pulling out; it began handing over bases to the government and withdrawing troops in March. This presents greater opportunity for terrorists to increase attacks on the war-torn country.
Filling the Void
There are many similar situations playing out across Africa and the Middle East. Consider Africa’s second-largest oil producer, Angola. In 2018, it relied on oil for a third of its gdp and 90 percent of its exports. This year, its economy is estimated to contract by 4.1 percent over 2020. Though it has so far seen limited Islamic terrorism, it has suffered through civil war. Prolonged economic stress could easily cause tensions to flare.
With America leaving, who will guarantee that oil fields in unstable countries like Iraq do not fall into terrorists’ hands?
Whenever the U.S. withdraws from an area in Africa or the Middle East, it leaves a power vacuum. Iran and its radical Islamic proxies are always close at hand, ready to fill that vacuum. Libya and Afghanistan are prime examples.
But another power is seeking to fill that vacuum—one that is already heavily involved in Africa.
Germany’s inroads into Africa and the Middle East put it in the perfect position to accomplish this. It has established small training missions in Djibouti, Mali, Niger and Somalia. It sends funds, advisers and training staff to Tunisia and Libya. The Luftwaffe has flown missions out of Jordan and may remain there indefinitely. And a secret Bundeswehr deployment, of which there may be more, was revealed last year in Cameroon.
Most would not expect Germany or its European allies to become the region’s next policeman. But one source predicts it will be.
Our March 2019 Trumpet issue stated, “Every important biblical prophecy that takes place in the Middle East occurs in a power vacuum created by America’s exit. In fact, Bible prophecy indicates that the U.S. will have vacated so entirely from the Middle East that it will not impact it at all.”
One such prophecy is found in Daniel 11:40: “And at the time of the end shall the king of the south push at him: and the king of the north shall come against him like a whirlwind, with chariots, and with horsemen, and with many ships; and he shall enter into the countries, and shall overflow and pass over.”
“The king of the south” refers to radical Islam led by Iran. But this prophecy does not discuss a war between America and Iran. Instead, it describes an Iranian provocation against the king of the north, which the Bible identifies as a united Europe led by Germany (request our free booklet Germany and the Holy Roman Empire, for proof).
Trumpet editor in chief Gerald Flurry explains the significance of the term “whirlwind” in Daniel 11:40, writing, “Germany has expected to clash with Iran, and it has been working on a strategy for a decade or more. That strategy is almost complete. Germany has surrounded Iran.”
The effects of the oil price crash could hasten the descent of these oil-dependent nations into social unrest, riots or even regime change. Iranian-backed terrorist organizations understand the significance of these countries, but so do Germany and Europe. This will soon force Europe to establish greater military presence to secure access to necessary resources—and put it in a position to fulfill Bible prophecy.
The clash between Europe and Iran will not bring peace. It will start the worst conflict mankind has ever experienced. This clash is clearly prophesied in your Bible, as part of a series of events that will put an end to the cycle of conflict forever.
For more on how America’s withdrawal and Germany’s growing involvement are leading to war, read our free booklet Germany’s Secret Strategy to Destroy Iran.