Crude oil prices have surged significantly on the international market, rising from USD 67.35 per barrel on June 11, 2025, to USD 72.30 per barrel as of June 13, 2025. This sharp increase nearly 7.4% within two days; is largely attributed to the escalating conflict between Israel and Iran, which has disrupted market confidence and raised fears of supply constraints from the Gulf region.
This price shock is expected to have a direct impact on Ghana’s domestic fuel pricing. Under the country’s deregulated pricing regime, increases in international benchmark prices automatically affect ex-refinery prices, which in turn influence pump prices. The anticipated adjustments will likely take effect in the second pricing window of June 2025, starting from June 16.
The implications: Inflation and Forex
- Inflationary Pressure: Fuel is a major input across all sectors, especially transportation, agriculture, and manufacturing. An increase in pump prices will elevate production and distribution costs, exerting upward pressure on consumer price inflation, which remains a key challenge for economic stability. Food prices and utility costs are likely to feel the ripple effect.
- Exchange Rate Vulnerability: The surge in oil prices also places renewed pressure on the Ghanaian cedi (GHS). As oil is the country’s single largest import item, higher import bills will increase demand for foreign exchange, particularly the US dollar, at a time when the cedi has relatively been stable. This could take away all the gains made, further weaken the currency, deepen balance of payments pressures, and exacerbate inflation through imported goods.
- This development reaffirms the urgent need for Ghana to strengthen its energy security through investments in strategic petroleum reserves, domestic refining capacity, and alternative energy sources to reduce exposure to global oil market volatility. In the short term, coordinated monetary and fiscal responses may be necessary to cushion consumers and stabilize macroeconomic fundamentals.
The writer, Kojo Monney is a Research Fellow, AIES
