Brent crude is starting the new week on the front foot, climbing above $108 a barrel on Monday as fresh concerns over oil supplies in the Middle East pushed prices higher.
Brent rose by more than 3% to around $107.81 a barrel, after gaining more than 9% last week. It briefly moved above $108 during trading, while US crude, WTI, also climbed above $102.
The latest rise comes after Saudi Arabia shut its East-West oil pipeline following drone attacks.
The pipeline is important because it gives Saudi Arabia a way to move crude to the Red Sea without sending it through the Strait of Hormuz. With shipping through Hormuz already facing disruption, taking another major route out of operation has added to concerns about how much oil can reach the market.
And there has been little progress on the diplomatic side.
Talks between Iran and Gulf states in Oman over arrangements for shipping through the Strait of Hormuz have been postponed. That means there is still no clear sign of a quick resolution to the disruption around the key oil route.
For oil markets, the worry is that the longer these disruptions last, the greater the pressure on available supplies. That is keeping traders particularly sensitive to every new development in the region.
What it means for Ghana
The higher global oil price comes as Ghana is already heading towards another fuel price increase.
The Chamber of Petroleum Consumers (COPEC) is projecting that petrol could rise to about GH¢16.26 per litre from Wednesday, September 16, up from GH¢15.60. Diesel is expected to move to around GH¢19.07 per litre, from GH¢17.30.
COPEC has pointed to higher international crude and refined petroleum product prices as key factors behind the expected increases.
So, while Brent’s move above $100 may seem like a development far from the Ghanaian consumer, it can eventually show up at the pump. And if crude prices remain elevated, fuel costs could continue to put pressure on transport and business operating costs.
For now, the big questions are whether Saudi Arabia can restore the East-West pipeline soon and whether shipping conditions around Hormuz improve.
