A stable oil pricing regime is being forecasted by analysts in the near term. Amid the economic downturn, the development will bode well for the domestic economy on the back of uncertainty.
The outlook for crude oil in 2023 has been described as uncertain as Russian oil production continues to exceed expectations, and supplies from Venezuela and Iran increasing due to the partial easing of sanctions, coupled with surplus supply from key markets against depressed demand over the increased risk of recession in other critical markets.
Already, there is controversy with the much-talked ‘gold for oil’ policy, which its adherents have touted as the reason for the pump price reduction during the last pricing window as some oil marketing companies have started selling a litre of petrol and diesel at GH¢12.95 and GH¢13.49, respectively, on average.
Many industry watchers have, however, cited the more stable cedi and the marginal drop in global crude oil prices for falling domestic pump prices.
Since the end of February, the global benchmark for crude oil, Brent, experienced a slight decline in price, dropping from approximately US$84.14 to roughly US$83.87 per barrel. The average prices during this period only showed a marginal decrease.
Within this time frame, the commodity’s price fluctuated, starting at around US$86 per barrel in the middle of the window but dropping to as low as US$74 per barrel on Wednesday, March 22, 2023.
The fact that crude oil prices have stabilised is a positive development as it provides some level of certainty for market participants.
These notwithstanding, the moderation of global oil prices could have an impact on government revenue at a time when it seeks increased fiscal consolidation.
It is, however, expected that as a net importer of crude oil, the reduction in ex-pump prices of products and the impact on transportation, and consequently inflation, would be positive.