Brent crude futures for July delivery declined by 1.1% or $1.04, settling at $92.67 a barrel at 0330 GMT. This drop occurred on Friday, following reports of a potential ceasefire extension between the United States and Iran.
United States oil futures also decreased by $1.26, or 1.4%, to $87.64 a barrel. The reported agreement includes lifting restrictions on shipping through the Strait of Hormuz, a critical waterway for global oil supplies. This development, although not yet finalised by US President Donald Trump, triggered the market reaction.
The week saw Brent crude plunge by 10.5%, its most significant weekly fall since April 6. US oil futures, known as WTI, also recorded a 9.2% weekly loss, the largest since April 13. This volatility reflects market anticipation for an end to the three-month US-Israeli conflict with Iran.
In Ghana, lower global oil prices could offer some relief to the national economy. Ghana is a net importer of refined petroleum products, meaning it buys more finished fuel than it produces. Reduced international prices can lead to lower import costs for the country. This can help stabilise the Ghana cedi (GHS) against major international currencies.
Lower fuel prices also directly impact transportation costs in Ghana. This could lead to a decrease in the cost of goods and services, helping to ease inflation. The Bank of Ghana closely watches these trends as it manages monetary policy. Persistent lower oil prices could support efforts to bring inflation within target ranges.
IG analyst Tony Sycamore noted, "Consensus remains the conflict is over, and a deal is coming." He added that this narrative could see crude oil extend its decline into the low $80s. This market sentiment influences trading decisions and future price projections.
The Strait of Hormuz is a narrow sea passageway. Roughly one-fifth of the world's oil and liquefied natural gas supplies pass through it. Disruptions in this area significantly impact global energy prices. Its potential reopening signals a return to more stable supply routes.
Analysts at ING stated that reopening the strait would provide immediate relief to the oil market. However, they cautioned that a full recovery in upstream oil production will be gradual. Upstream production refers to the exploration and extraction of crude oil.
Many producers have reduced output due to storage constraints during the conflict. Restoring infrastructure damaged during attacks will also take time. Refineries in the region need to increase their output, which is a complex process. The phased recovery means that benefits to Ghana's economy might also be gradual, not immediate. Decision-makers and markets will closely monitor the finalisation of the US-Iran deal. The speed of oil production recovery and its impact on global supply will be key. Any sustained decrease in global oil prices will influence Ghana’s national budget and economic planning.