Oil prices have remained consistently high and volatile over the past few years. According to estimates, they may remain this way at least until 2014. The Brent crude spot price, which averaged 112 dollars a barrel in 2012, is projected to remain above 100 dollars a barrel. This is at an average of 108 dollars and 101 dollars per barrel, in 2013 and 2014, respectively.

High oil prices may dampen the global economy, which is still struggling to recover from the 2008 financial crisis. High oil prices above 100 dollars can be explained by many factors and they may affect economies in an uneven way, with an unclear outcome for the global economy as a whole. According to estimates by the International Monetary Fund (IMF), a 50pc increase in oil prices, due to a supply shock, would lead to a one to 1.5pc decrease in output, in many regions of the world.

Rising oil prices will affect African economies differently depending on whether they are net exporters or net importers of the commodity. For oil-importing economies, high oil prices could translate into high import bills with adverse effects on inflation, production and employment.

In contrast, oil-exporting economies could benefit from high oil prices, because an increase in oil revenues improves their balance of payments. In addition, price volatility may harm both importers and exporters of oil. It lowers, for instance, the predictability of marginal costs of production for companies. The uncertainty regarding their cash flows may induce companies to reduce their investments and limit job creation, which can consequently harm economic growth.

Oil prices have increased since 2003, from less than 40 dollars to more than 100 dollars per barrel today. Oil prices fell sharply in 2008, before recovering steadily since then. Prices were volatile during 2011 and 2012, mainly because of the Arab Spring and events in Libya, in addition to conflict between Sudan and South Sudan. Many uncertain and conflicting factors on both supply and demand sides have contributed to the persistent high oil prices in recent years.

Geopolitical factors are the main causes that drove up oil prices in producing countries. In the past decade, wars in Iraq and political tensions in the Middle East and North Africa have affected the oil market.

More recently, disagreements between Western nations and Iran - one of the largest oil producers and exporters in the world - have fuelled risks of sharp disruptions in oil supplies globally. This, in turn, had a significant impact on prices of the commodity. In contrast, major oil producing countries, mainly Saudi Arabia, may not be able to boost production and instead have to cover losses elsewhere, as their capacities are reaching their limit. The decline in aggregate oil inventories and high costs of oil extraction and production are other supply-side factors affecting oil prices.

Increasing demand from major emerging economies, such as China and India, has also played an important role in keeping oil prices persistently high over the past years. The Asian continent surpassed the US and is now the largest consumer of oil in the world.

Despite the slowdown in economic growth in China and India, demand will remain higher. This will keep oil prices at high levels. Furthermore, as growth is resuming in the US and as the crisis in the euro area seems to be easing, global demand for oil may increase.

Recent advances in extracting shale gas, notably in the US, are changing the dynamics of global energy markets. The projected development of shale gas in the world is expected to affect global energy prices. However, oil-exporting African countries will not be threatened as much by the shale gas, as the depletion of traditional oil fields will not be totally covered by new discoveries of shale gas. In addition, the impact of lower demand for African crude oil by the US will be compensated by the boom of energy consumption by developing countries, including mainly China and India.

High oil prices do not benefit all African countries. Only a quarter of African countries produce oil and have run financial surplus.

In contrast, African oil importers have to pay substantial amounts when oil prices increase. Thus, 15pc of the income of some countries is used to pay for imported oil. High oil prices may affect economic growth, agricultural and manufacturing sectors, exploration and production activities, social and political stability, as well as fostering the creation of sovereign wealth funds.

Over the past decade, the African continent has recorded unprecedented high growth rates. For many African countries, economic growth was mainly driven by high commodity prices, especially oil. Thus, African economies will be vulnerable to variations in oil prices and growth may sharply fall in case of a reversing trend in the oil market.

Due to persistent high oil prices and large discoveries of oil and gas reserves, resource-rich African countries may face the Dutch disease phenomenon. In fact, large exploitation of oil, gas and minerals may lead to the decline in productive sectors, such as manufacturing and agriculture. In Ghana, for instance, where the large commercial production of oil has begun in the past two years, the economy started showing signs of Dutch disease. In fact, recent evidence indicates that the growth of the country's agricultural sector has declined.

High oil prices are driving growth in exploration activities in Africa. In some parts of the continent, high oil prices and the arrival of new exploration techniques have created incentives for major oil and gas companies to intensify their presence on the continent.

This growing interest may transform Africa into a new hub for natural resources, especially for oil exploration and production. The East African region is particularly enjoying a boom in its oil and gas industry, through massive investments undertaken by global energy companies and countries including China.

As an input for many products used daily by millions of people, an increase in oil prices may significantly affect the cost of living for Africans. This could trigger social protests and threaten political stability of a country.

In addition to the issue of youth unemployment, the high cost of living was considered one of the issues that fuelled the uprising in North Africa. Food prices are particularly vulnerable to increases in oil prices, as the cost of production in the agricultural sector are linked to energy prices.

Persistent high oil prices will further worsen the situation of the poorest, as food represents the bulk of their consumption basket. In 2008, many African countries experienced social unrest following a significant spike in food prices.

No net effect could be established, however, as the case would vary with the differing economic structures of nations.

Mthuli Ncube (phd) Mthuli Ncube (phd), Chief Economist and Vice President of the African Development Bank (afdb)