On Wednesday, five leaders of African countries chaired the foundation stone laying ceremony for an oil refinery project in East Africa at a cost of $16 billion, in response to calls for the continent to enhance its self-sufficiency in converting raw materials into finished products.
Kenyan President William Ruto hosted his counterparts from Uganda, Ethiopia, Togo and Benin, as well as former Nigerian President Olusegun Obasanjo, where they bulldozed soil at the site as a symbolic gesture to begin construction of the refinery.
The refinery is expected to process 700,000 barrels of oil per day when work is completed within 40 months.
Nigerian billionaire Aliko Dangote will implement the project in the coastal city of Lamu. Dangote had stressed the need for Africa to “industrialize,” stressing on Wednesday that the continent could not continue to “export what it has and import what it needs.”
The refinery will depend on oil coming from neighboring countries such as Uganda, which plans to export its oil via Tanzania, and South Sudan, which exports its oil via Sudan.
Dangote pointed out that East African countries provide a sufficient market for the oil that will be refined locally, explaining that the consumption of countries in the region far exceeds the volume of 700,000 barrels per day that the refinery will produce.
The refinery was initially scheduled to be established in the coastal city of Tanga, Tanzania, but Dangote explained that it was later decided to choose Lamu. Due to its deeper waters, solid land capable of bearing heavy equipment, and access to the depths of the sea.
Other East African countries - Rwanda, Burundi, South Sudan and Tanzania - also sent heads of delegations to represent their leaders at the ceremony.
Analysts raised their forecasts for oil prices for the year 2026, and expected that the average Brent crude oil standard would reach about $90 per barrel, as the disruption of Gulf exports offset concerns about demand growth.
A poll conducted in September that included 30 economists and analysts, according to Reuters, expected that Brent crude would average $89.05 per barrel in 2026, and US crude would average $83.90 per barrel.
Expectations for average Brent prices ranged between $77.27 and $97.60.
Several analysts said the market has become increasingly convinced that a full restoration of exports through the Strait of Hormuz remains unlikely in the near term, putting the burden of absorbing a large part of the supply shortage on inventories.
This comes at a time when unrest is increasing in the Strait of Hormuz, which used to transport about 20 percent of the world's oil and gas supplies before the Iran war in late February.
Japanese factory production unexpectedly fell in August for the second month in a row, affected by a decline in the production of cars and machinery, in data that may further complicate the Bank of Japan’s calculations about the timing of the next increase in interest rates.
Data from the Ministry of Economy, Trade and Industry showed on Wednesday that industrial production declined by 1.7 percent in August compared to the previous month, a result that was in complete contrast to the average market expectations in a Reuters poll, which suggested that production would rise by the same percentage of 1.7 percent.
The continued decline for the second month indicates pressures facing the industrial sector, despite companies expecting a recovery during the following two months.
The automotive sector was one of the most prominent reasons for the decline, as vehicle production decreased by 6.8 percent compared to July, after the repercussions of an earthquake and hurricane disrupted production operations. Production of general-use and business-grade machinery also decreased by 6 percent.
Despite the weakness of August data, manufacturers' expectations appear more optimistic about the coming period. A survey conducted by the ministry showed that manufacturers expect seasonally adjusted production to rise by 3.2 percent in September, then another increase of 3.1 percent in October.
The data gains additional importance in light of the growing controversy regarding the next path of Japanese monetary policy, after the Bank of Japan raised interest rates as part of the monetary policy normalization process.
Industrial production indicators are likely to be among the data that the bank will scrutinize before making a decision on raising interest rates again in the near future, as it needs to balance inflationary pressures on the one hand, and the strength of economic activity and the ability of companies to bear rising borrowing costs on the other hand.
The sudden decline in August production makes the picture of the economy more mixed, especially with rising market expectations about further monetary tightening. The extent to which companies' expectations for a production recovery in September and October are met will be an important factor in assessing the strength of the industrial sector and the sustainability of Japanese economic recovery.
