France-Algeria: what are the risks for trade if tensions worsen?

Trade of goods between France and Algeria represents a significant share of France-Africa trade, while remaining low in relation to overall French trade (0. 8 % of French exports and 0 . 9 % of imports). Political tensions between both countries are rising for some time now, making it necessary to assess the potential consequences of a further escalation. France's trade balance with Algeria has been in deficit since 2021 , due to higher imports - particularly in hydrocarbons following the war in Ukraine - and the increase in energy prices. Trade between the two countries is strongly specialized: France imports hydrocarbons - with oil representing 39% of total French imports and gas representing 42% in 2023 - and exports products from pharmaceutical and automotive sectors . Taking our base-case that only spot gas sales would be impacted in a trade war scenario, additional costs would arise from higher cost of shipping replacement volumes from further afield, although this is relatively insignificant. Should contracted flow be impacted, replacing oil-linked Algerian exports with spot gas imports using our 2025 energy price forecasts implies additional costs of €1.25bn on an annual basis. Given the relative fungibility of the oil market and the availability of similar crudes in-basin to Algeria’s Sahara export blend, we see limited additional cost arising from the replacement of French imports of Algerian crude with alternative barrels .