Oil transition threatens revenue shocks in Nigeria and Algeria

A global shift away from oil is likely to hit some African states hardest, with researchers warning of economic shocks that can spill into conflict and migration, according to The Guardian. The report it covers singles out Nigeria and Algeria as countries heavily reliant on oil revenues for public services, with limited diversification and little capital to cushion a downturn.

The risk is not framed as a distant climate-policy abstraction but as a budget problem with few easy substitutes. The Guardian cites forecasts that global demand for oil will plateau in the coming decade, with a peak likely in the early 2030s, forcing producers to compete for a shrinking pool of buyers. In that environment, the paper says, low-cost producers with modern infrastructure—such as Saudi Arabia and the United Arab Emirates—are positioned to endure longer, while higher-cost or less-prepared producers are squeezed first.

For states that fund day-to-day governance from hydrocarbons, the numbers are stark. The Guardian reports that oil income makes up more than 40% of government revenue in 17 countries worldwide, and that in Iraq and Libya it accounts for 70% to 90%. E3G, the thinktank behind the analysis, forecasts oil revenue falling rapidly from 2030; in the scenarios described by The Guardian, Algeria faces an 87% drop and Nigeria more than a 60% drop.

The paper links the transition risk to the broader security environment already reshaping energy markets. It notes that the Iran war has constrained supply, pushed prices up and contributed to inflation and political instability. That kind of volatility can temporarily mask the underlying direction of travel—high prices keep producers afloat and encourage them to cling to the revenue stream—while also raising the stakes when demand finally weakens and prices fall.

E3G compiled the report over two years and ran war-gaming scenarios with more than 100 public servants and experts worldwide, The Guardian says, with co-authors warning governments are not prepared for the outcomes. Algeria is flagged as “one to watch”, partly because of its proximity to Europe and near-total reliance on the EU for exports—meaning fiscal stress in Algiers can translate quickly into pressure at Europe’s borders.

The Guardian’s story includes a photograph of two men walking past gas flares in Nigeria’s Niger Delta. The report’s premise is that when the flares dim, the public payroll and the security budget dim with them.