Petroleum product prices are expected to rise in the coming weeks due to a reduction in global oil supply.
This is due to the Organization of the Petroleum Exporting Countries plus (OPEC plus) announcing a two million barrel per day reduction in production.
The smallest change in the price of crude oil has enormous ramifications for economies all over the world.
When crude prices rise, the impact is felt almost everywhere in the economy, especially in emerging economies like Ghana.
According to current estimates, the Organization of Petroleum Exporting Countries (OPEC) controls approximately 80% of the world’s oil reserves, producing approximately 30% of global consumption each day.
OPEC is made up of 23 countries, but in 2016, during a period of low oil prices, OPEC joined forces with 10 other oil producers to form OPEC.
This group of 23 oil-producing countries meets on a regular basis to decide how much crude oil to sell on the global market.
On October 5, 2022, OPEC members agreed to reduce production by two million barrels per day.
The cut, which will go into effect in November, represents around 2% of the global oil supply, which is more than had been anticipated.
According to Forbes, many oil and gas stocks have been trending lower since mid-2014, and there are indications that as the world shifts toward clean energy, fossil fuel producers will be impacted in the long run.
Many believe that this is one of the reasons OPEC is attempting to cut production in order to raise the price of crude from the current $90 per barrel.
Also read: Ghanaians lament as fuel prices go up again
The United States has criticized the move and is expected to increase its own production to help the situation, but Duncan Amoah of the Chamber of Petroleum Consumers says this may not be enough and that Ghanaians should brace themselves for higher pump prices.
“With these announcements, prices are likely to rebound above the US$100 mark.” That simply means that countries like Ghana will have to pay more for oil. Not only that, but the cedi’s continued depreciation, which OPEC is preparing to do, will push us into tougher times.”
Mr. Amoah once again suggested that the government make some decisions to protect consumers from the expected increase in petroleum products.
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