The World Bank has raised concern that tensions in the Middle East could reverse the gradual opening up of global markets, which saw Côte d'Ivoire, Benin and Kenya issue Eurobonds at the start of 2024 after close to 24 months of the continent’s absence from the global markets due to punitive interest rates, The East African reports.

The World Bank Chief Economist for Africa, Andrew Dabalen, told The EastAfrican that the escalating conflict between Israel and its neighbours risks pushing up the price of oil on the global markets, a development that could trigger the resurgence of high inflation and tightening of interest rates by major central banks, making global markets inaccessible to frontier economies, especially those in Africa.

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Whereas Africa’s major dollar-denominated maturities for 2024 have largely been addressed, there is concern that any fresh blockade of the global markets would complicate an already prolonged process of debt distress resolution for the wider frontier economies.

Africa’s major maturities for 2024 were Kenya’s $2 billion Eurobond maturity, which has been partially refinanced, and Egypt’s pending $2.57 billion maturities, which have been addressed through bucketloads of concessional financing following the 166.7 percent increase in the size of its programme with the International Monetary Fund to $8 billion this month.

Other African maturities lined up for 2024 include Kenya’s $600 million due on June 24 and Senegal’s $162.94 million due on July 30.

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"The thing that we are watching the most is what’s going on in the Middle East, there has been a significant escalation of conflict there. What we worry most about that is the possibility that the price of oil will rise and if the oil prices go up this could really fuel inflation and keep interest rates very high in the US and Europe which will then lead to currency depreciation and devaluation and ultimately lower growth,” Dr Dabalen told The EastAfrican.

The concerns being raised by the World Bank come at a time when the Opec basket price has risen above the $90 per barrel mark in April 2024 for the first time in 10 months, raising fears that the emerging subdued inflation in the continent may be short-lived if the trend persists.

Dr Dabalen says that whereas three African economies have been able to return to the global markets in 2024, there is indication that the premium being asked by investors is punitive and renders the market largely inaccessible for economies in debt distress which may be in most need.

"Right now, we have seen inflation come down in Africa and there is a real concern that, indeed, if oil prices begin to edge up -- and you know 18 percent of oil consumption in the world comes through the price in the Gulf -- and if that gets disrupted it will definitely increase inflation and just when we think that we have brought inflation under control it might get out of hand, and that’s the main worry here. You mentioned Côte d' Ivoire, Benin and Kenya going back to the global market. There was a slight opening of the door for financial market access but this is coming at a very high cost. For a lot of countries that are under debt distress that are not a Kenya, a Benin or a Côte d' Ivoire, the premium is around 12 percent and so they don’t have access,” Dr Dabalen said.

Iran launched drones targeted at Israel on the night of April 13 in what Iran says was a response to the April 1 Israeli strike on its consulate in Damascus, the capital of Syria.

On Thursday, an Iranian commander said Tehran could review its "nuclear doctrine" amid Israeli threats, raising concerns about Iran’s nuclear programme, which it has always said was strictly for peaceful purposes.

"A review of our nuclear doctrine and politics as well as considerations previously communicated is entirely possible," Ahmad Haghtalab, the commander in charge of nuclear security, said according to semi-official Tasnim news agency

Iran's Supreme Leader Ayatollah Ali Khamenei has the last say on Tehran's nuclear programme, which the West suspects has military purposes.