Lusaka – International commodity markets showed a mixed performance on Wednesday, with energy prices largely edging down, a trend that holds both relief and new challenges for Zambia’s economy. As a country heavily dependent on fuel imports and mineral exports, Zambia remains sensitive to volatility in global energy and industrial commodity markets.
Oil Prices Continue Downward Slide
Crude oil prices remained under pressure, with Crude Oil trading at USD 58.67 per barrel, posting a modest 0.04% daily gain but a 2.4% monthly decline and a sharp 18.15% drop since the start of the year. Brent crude also softened, slipping 0.08% to USD 63.08 per barrel.
For Zambia, falling oil prices offer some breathing room. The nation imports all its petroleum products, and lower global prices may reduce the cost pressure on domestic fuel pricing going forward. This could help stabilise inflation, which has been heavily influenced by transport and energy costs.
However, analysts caution that global price reductions do not immediately translate to lower pump prices due to existing supply contracts and exchange rate fluctuations.
Natural Gas Sees Strong Gains
Natural gas surged 1.11% to USD 4.61 per MMBtu, supported by rising winter demand in major markets. Despite weekly declines, the commodity has posted a significant 27% year-to-date increase.
Higher gas prices do not directly impact Zambia’s domestic energy costs, as the country does not consume natural gas at scale. However, elevated global gas prices can influence international fertilizer prices, raising production and import costs for agriculture a key sector currently preparing for the farming season.
Fuel Products Show Mixed Performance
Gasoline rose 1.08%, while heating oil dipped 0.14%. The seasonal demand shift in Europe and North America continues to shape trading patterns.
For Zambia, refined fuel price trends matter because they affect procurement costs for the Energy Regulation Board (ERB) monthly fuel price reviews.
Coal Steady, Uranium Slightly Up
Coal prices were flat at USD 111.15, showing little movement, while uranium edged up 0.26% to USD 76.35 per pound.
Zambia’s mining sector particularly copper and cobalt operations relies on consistent energy supply, and stable coal prices are a positive sign for energy-intensive smelters.
European Gas Prices Decline Sharply
TTF Gas in Europe dropped 0.23%, reflecting a 42% year-to-date plunge, while UK gas also fell nearly 39% this year. The sharp reductions reflect well-supplied markets and mild seasonal conditions.
Although Zambia is not directly tied to European energy markets, the decline contributes to a more stable global energy environment, which supports moderated import inflation.
Impact on Zambia’s Trade and Currency
The overall dip in international energy prices is favourable for Zambia’s import bill, potentially reducing pressure on the Kwacha in the medium term. However, export-linked commodities offered little momentum.
Urals Oil a benchmark relevant for global energy sentiment
fell over 21% year-to-date, signalling weaker demand. Meanwhile, methanol dipped 5% monthly, while naphtha and propane continued to weaken.
Lower commodity prices globally may soften demand for Zambia’s copper exports indirectly by dampening industrial activity in major economies, influencing overall foreign exchange earnings.
Economic Outlook
Economists say Zambia stands at a balancing point:
- Lower oil prices could ease transport-driven inflation.
- Higher gas and fertilizer-linked prices may strain agricultural costs.
- Moderate industrial commodity movement suggests global demand remains uncertain.
As global markets remain volatile, Zambia’s economic performance will continue to hinge on its ability to diversify and cushion itself from external shocks.
