Even as oil prices drop on the international market, the Chamber of Petroleum Consumers Ghana-COPEC, has called on the government to put in place strategies to protect Ghanaians against a possible hike in oil prices due to any escalation in US-Iran relations in the near future.
According to COPEC, the government can consider hedging as a strategy to cushion Ghana in the future when the global oil market gets volatile.
Oil prices spiked and stock markets opened lower on Friday January 3rd, 2020 after a US airstrike killed Iranian major-general Qassem Soleimani, head of the elite Quds force, in a major escalation of hostility between Washington and Tehran.
Speaking to Citi Business News on the evolving situation, Convener of COPEC, Duncan Amoah said hedging of oil prices should be a priority of the government in order to protect Ghanaians from any fuel price hikes at the pumps.
“Iran controls the Strait of Hormuz, a rout that a lot of oil transporters can’t do without. Now if they decide to block the strait, expect oil prices to rise significantly. The government may, therefore, need to plan ahead and put in place a forecastable plan that says that things could degenerate in the gulf and we will mitigate it with so and so measure. If we don’t put in place any strategic plans, we may be in for some tricky and dangerous times.”
Brent Crude rose 3.8 percent to $68.87 on the day of the strike. For analysts, in the immediate aftermath of the strike, a sustained rise in oil prices would have pushed up prices for consumers at the pumps and increase costs for businesses.
A week after the killing of the Iranian General, Oil prices contrary to expectations have tumbled to around US$ 65.48 dollars a barrel after President Donald Trump signaled tensions with Iran are easing, reducing fears of a deeper conflict between the two nations.
Duncan Amoah, however, believes it is critical that the interest of Ghanaian businesses and the general public is protected.
“The implication and impact of a possible hike in oil prices on businesses, trotro drivers and other Ghanaians cannot be overlooked, and it’s not something that the government itself can afford. So, the government will need to plan ahead, gauge what is happening in the Middle-East and put in measures that can mitigate whatever the outcome may be.”