Since January, crude oil prices have fallen to a six-month low. At the height of the Russia-Ukraine war, oil prices skyrocketed to over $120 per barrel.
On the world market in July, oil was $102, compared to a significant drop to $87 as of Wednesday, August 17, 2022.
Despite this development in the world oil market, the Ghanaian transport industry has seen no reduction in the cost of transportation. The sharp increase in transport fares, which began in March this year, was mainly due to Russia, a major oil-producing country’s involvement in a conflict with Ukraine.
Oil prices are volatile and thus respond to developments around the world. President Biden visited Saudi Arabia in a bid to encourage the Kingdom to increase oil production. Another reason prices are plummeting is the decrease in demand. China, the world’s largest oil importer, has recently limited activities in most of its cities on measures to battle the Covid-19 pandemic.
Prices are likely to drop further if Iran agrees to increase its production, but this could be temporary as European sanctions on Russian oil will take effect from December, and another uncertain future for oil prices awaits.
Why is the decrease in world prices not affecting the local market? The weak performance of the cedi against the dollar and other major currencies, coupled with taxes imposed on oil products, are the main reasons Ghana has seen no price reduction in petroleum products.
While the average Ghanaian questions why food prices as well as prices for goods and services keep rising, an increase in oil prices pushes inflation further up since it costs more to transport food items.
The Chamber of Petroleum Consumers (COPEC) warned that prices on petroleum products could see a 5.5% increase. “The forex market has, unfortunately, however, been pretty turbulent over the period with the Cedi depreciating steeply to close trading at about $9.8313 per dollar,” it said in a statement, citing the Cedi’s depreciation for the potential increase.
Bainamultimedia/ Ibrahim Jabir
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