Editorial: Major disruption as oil price reaches US$120!

Heavy reliance on oil imports could threaten the country’s economic stability as conflict in the Middle East escalates and drags on.

The benchmark oil price has passed US$100 a barrel for the first time since 2022 causing G7 finance ministers to hold an emergency meeting. G7 nations held an emergency meeting on Monday, (yesterday), to discuss surging oil prices as crude jumped above $100 a barrel and stock markets slumped over the escalating US-Israeli war with Iran.

Global oil prices reached nearly US$120 on Monday over fears of a prolonged disruption to energy supplies through the key Strait of Hormuz shipping route and the UK’s FTSE 100 share index fell 1.3%.

Major disruption to energy supplies from the region threatens to push up prices for consumers and businesses around the world. Rising inflation could lead to fewer interest rate cuts by central banks.

The Ministry of Energy and Green Transition has assured Ghanaians that the country is not facing an immediate fuel supply shortage, despite growing concerns over rising tensions in the Middle East.

Ghana currently has sufficient fuel stocks to meet demand in the short-term. According to the ministry, the country’s immediate focus remains on ensuring that adequate fuel stocks are maintained.

Also, additional fuel shipments are already in the country’s ports and will soon be discharged – potentially extending Ghana’s reserves significantly.

Rising oil prices can have wide-ranging effects, not only on how much it costs to fill up your vehicle but also on the prices of some heating, food and imported goods.

Qatar’s energy minister Saad al-Kaabi said oil could hit US$150 a barrel if the Iran conflict continues over the coming weeks. “Everybody’s energy price is going to go higher. There will be shortages of some products and there will be a chain reaction of factories that can’t supply.”

Qatar is a major producer and exporter of oil and liquefied natural gas (LNG). QatarEnergy said it had stopped production of LNG following “military attacks” on its facilities.

Kaabi – who is also chief executive of QatarEnergy – said even if the war stopped now, it would take “weeks to months” to resume normal output.

However, Economist Dr. Adu Owusu Sarkodie believes escalating war in the Middle East could unexpectedly boost Ghana’s revenue if rising global oil prices persist. He argues that oil-producing countries like Ghana could benefit from higher crude prices on the global market.

To him, if Ghana maintains its current production levels while prices rise, the country could generate more revenue than initially projected in its economic forecasts.

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