Global oil prices have dramatically surged after Israel claimed it struck Iran, amidst escalating tensions in the Middle East.
Brent crude, the global benchmark, was last up 6.3% at $71 a barrel. US oil jumped 8.5% to nearly $74 a barrel, after gaining as much as 13% earlier in the day. Those are the biggest intraday gains for each benchmark since March 2022, a month after Russia launched a full-scale invasion of Ukraine, according to CNN.
After the initial jump, oil prices eased a little. But Brent crude was still about 8% higher than Thursday’s closing price, trading at about $74.65 a barrel.
Investors are concerned about how a retaliation by Iran may play out, whether the US may be targeted, and whether a critical oil transport route may be disrupted. If the conflict eliminates Iranian oil from the market, oil prices could spike by about $7.50 a barrel, says CNN.
The bigger fear now is an even broader conflict that impacts the flow of oil from the Strait of Hormuz, the most critical chokepoint for oil supplies on the planet.
Analysts predict that if Iran’s oil production and export facilities are targeted, Brent crude prices could rise to $80-$100 a barrel.
What does this mean for Ghana’s economy and oil market?
Global oil prices have been on a downward trend, which has caused a significant decrease in the prices of fuel at the pump.
In December 2024, the average price exceeded $75 per barrel. In January of this year, the average price hovered around $80 per barrel. Crude oil is currently trading for approximately $60 per barrel. This shows that between January and May 2025, crude oil prices fell by nearly 25%.
Industry analysts anticipate that, if all other factors remain constant, crude oil prices might fall to around $40 per barrel sooner rather than later.
However, Global oil price variations might have a huge impact on Ghana’s economy, raising the costs of transportation, production, and common products, making life more expensive for businesses and consumers.
While short-term pricing adjustments may not have a significant influence on the economy, long-term increases limit economic growth. Rising fuel prices are mostly the result of inflation, which raises fuel costs, and a weakening cedi, which makes importing petroleum more expensive. Effective control of these elements can help to keep fuel prices stable and preserve the economy.
Despite the new global development that might cause oil prices to increase in various countries, analysts say it is “too soon” to say what impact the latest rise in oil would have on petrol prices.
Fortunately for Ghana, though, the appreciation of the Ghana cedi over the past few weeks has led to a decrease in prices of fuel and other commodities. If it comes to the worst-case scenario, the value of the cedi can cushion the country since the importation of petroleum will be less expensive.
Reducing the effects of fuel hikes
To mitigate the impact of high fuel prices, policymakers may have to review and adjust fuel taxes, such as the recent fuel levy, to keep fuel prices affordable.
Efforts should be put into stabilizing the value of the cedi with strong monetary policies and increased foreign exchange reserves, to prevent extreme fuel price hikes.
Establishing fuel reserves can also help prepare for future price hikes by storing fuel now that prices are low, releasing reserves during crises, and ensuring fuel availability at stable prices. This strategy helps businesses and households plan better and avoid economic shocks.
