Unfazed: African exporters are staring at $15 oil forecasts, but they keep pumping — here's why

It's tough out there: Rich country-growth will hover at 2% next year, China's economy is slowing down and Brazil, Russia are staring at a recession.

AFRICA’S oil production is expected to hold steady at 2.38 million barrels a day in the coming months, the Organisation for Petroleum Exporting Countries (OPEC) says in its latest monthly report, even as analysts say oil prices could tumble to as low to $15 a barrel.

Equatorial Guinea and Congo-Brazzaville are expected to slightly increase production, the report says, while supply from the traditional heavy hitters of Nigeria, Angola and Algeria is predicted to either remain flat or decline.

Output from South Sudan rose marginally to 0.17 million barrels a day in June from the previous month, and although a peace agreement was signed in August, whether it will hold remains uncertain.

Last week, global investment banker Goldman Sachs said that the global oversupply of oil was even bigger than they had thought, with its analysts anticipating a $20 price tag as soon as next year.

But influential money manager David Kotok sees it plummeting even further.

“There is no evidence whatsoever to suggest we have bottomed. You could have $15 or $20 oil—easily,” Kotok told CNNMoney.

Goldman cut its Brent and WTI crude forecasts for 2016, arguing that without reducing production, the global industry may require prices at that level to clear the oversupply.

“The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016,” Goldman analysts including Damien Courvalin wrote in the report. “We continue to view US shale as the likely near-term source of supply adjustment.”

They have been wrong before, having forecast $200 oil.

No money to show
But with Organisation for Economic Co-operation and Development (OECD) growth expected to hover around 2% next year, the Chinese economy slowing down and Brazil and Russia staring at a recession, it’s just not happy news for African oil exporters, who are finding their hands deep in the greasy stuff, but no money to show for it.

World economic growth has been revised downwards to 3.1% for 2015 and to 3.4% for 2016, and major emerging economies are “increasingly facing challenges”, the OPEC report states.

Of the four major emerging economies, Brazil and Russia are in recession this year and Brazil’s GDP is forecast to contract in 2016. While China continues to grow, it will do so at a slower pace of 6.8% in 2015 and 6.4% in 2016.

All in all, the importance of monetary decisions will also play a key role in the near future, says OPEC.

The decision of the US Fed regarding the timing and the magnitude of an interest rate hike may turn out to be an important factor for the global economy.

This, together with the uncertainties about China’s growth level has had a significant impact on currency markets, especially on emerging market currencies, which ultimately affect the oil market.

Despite moderate economic growth, recent data shows better-than-expected oil-demand in the main consuming countries, mainly driven by lower oil prices. At the same time, US oil production has shown signs of slowing, OPEC says.

“This could contribute to a reduction in the imbalance of oil market fundamentals, however, it remains to be seen to what extent this can be achieved in the months to come,” the report states.

In other words. Africa has little option but to call the world’s bluff.

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