As the conflict in the Middle East continues to gather momentum, Natural Resource Governance expert Dr. Steve Manteaw has outlined a five-point strategy he believes could help Ghana cushion itself against the potential shocks.
The world’s energy sector is already threatened, as a significant part of the world’s crude oil originates from the Middle East, the epicentre of the conflict. Already, some fuel infrastructures have been targets of missile attacks, as many facilities in Saudi Arabia, Qatar, and Kuwait have been shut down.
The Strait of Hormuz, where 20% of the world’s energy passes, has been blocked by Iran’s forces as the war escalates.
The development has cast a dark shadow on the world’s energy and prices on the international market have started responding to the development.
In a policy commentary, Dr. Manteaw warned that tensions in the Middle East could quickly translate into higher crude oil prices and supply disruptions, with direct consequences for Ghana’s fuel market and the broader economy.
To prevent such shocks from destabilising the sector, he urged government and regulators, particularly the National Petroleum Authority, to adopt proactive measures aimed at safeguarding supply and stabilising prices.
Build Stronger Strategic Reserves
Dr. Manteaw’s first recommendation is for Ghana to intensify the build-up of fuel stockpiles and strategic reserves.
According to him, maintaining higher reserves would provide a crucial buffer against sudden supply disruptions or price spikes triggered by geopolitical tensions. Strategic reserves, he explained, allow countries to maintain a steady supply in the short term while global markets adjust to shocks.
At the start of the conflict, the NPA assured consumers that the country had about five weeks of fuel supply. The bigger question is, does the country have the storage facilities to keep reserves that can run into months?
Consider Temporary Tax Relief if Prices Surge
He also advised the government to remain flexible with the tax component in Ghana’s fuel pricing structure.
If global prices continue to rise sharply, Dr. Manteaw suggested authorities could temporarily suspend some taxes included in the petroleum price build-up to prevent excessive increases at the pump.
Such a move, he noted, would help cushion consumers and businesses already grappling with high operating costs.
Pause Discounted Pricing Directive
Dr. Manteaw further recommended suspending the directive requiring some oil marketing companies to sell petroleum products at discounted prices.
While the policy was originally intended to promote competition and lower consumer prices, he argued that maintaining it during a global supply shock could strain industry players and worsen supply pressures.
Use Stabilisation Fund Windfalls Wisely
Another key proposal involves the Petroleum Revenue Management Act-backed Petroleum Stabilisation Fund. Dr. Manteaw suggested that the government could redirect part of the additional revenues the fund receives when global fuel prices rise.
These windfalls, he said, could be used to offset revenue losses if certain petroleum taxes are temporarily suspended. This approach, he argued, would help maintain fiscal balance while providing relief to consumers.
“Consider ploughing back some of the windfall accruing to the Stabilisation Fund as a result of price-induced increase in petroleum revenues, to fill the gap that the suspension of some of the taxes on the price build-up may create,” he advocated.
Avoid Price Distortions that Encourage Smuggling
However, he cautioned against using the Stabilisation Fund to push fuel prices too low. Subsidising prices beyond a certain threshold, he warned, could create significant price differences between Ghana and neighbouring countries, potentially triggering cross-border fuel smuggling.
Instead, he advised policymakers to strike a careful balance, providing relief without distorting market incentives.
“We should be mindful not to subsidize petroleum prices through the Stabilisation Fund, below a threshold that will trigger smuggling of petroleum products across our borders,” he noted.
A Call for Proactive Planning
Dr. Manteaw’s proposals come at a time when global energy markets remain highly sensitive to developments in the Middle East, where geopolitical tensions have historically triggered sharp swings in oil prices.
For Ghana, which imports a large share of its refined petroleum products, such shocks can quickly ripple through transportation costs, inflation, and overall economic stability.
By strengthening reserves, maintaining flexible taxation policies, and carefully managing stabilisation mechanisms, Dr. Manteaw believes Ghana can reduce its vulnerability to global energy shocks and protect both consumers and industry players.
