Fuel prices set to rise gain amid worsening cedi performance

Fuel prices in Ghana are expected to rise again in the first half of June 2024, the Institute for Energy Security (IES) has predicted.

This outlook is driven by developments in the foreign fuel and domestic forex markets, particularly the weakening performance of the cedi.

Despite global fuel prices showing a decrease in recent weeks — petrol by 4.17%, diesel by 0.87%, and liquefied petroleum gas (LPG) by 3.44% — these reductions may not be felt at local pumps.

The IES points out that the significant depreciation of the cedi against the US dollar, by 4.17%, might offset the potential benefits from the global price drops.

Global market trends

Monitoring by the IES of the Standard & Poor's (S&P's) Platts on petroleum products indicates that prices on the world market have decreased.

For the second pricing window of May 2024, petrol closed at $851.73 per metric tonne, diesel at $749.70 per metric tonne, and LPG at $444.80 per metric tonne.

Local market impact

However, back home, the decline in the cedi's value has stalled any expected price reductions.

The national average prices for the second pricing window of May 2024 show that petrol and diesel are selling at GH₵14.22 and GH₵14.00 per litre, respectively, while LPG is priced at GH₵15.63 per kilogram.

The IES observed that prices for diesel and petrol remained relatively stable among most Oil Marketing Companies (OMCs) during this period.

Despite the favourable changes in international prices, the local currency's depreciation continues to be a significant hurdle, preventing consumers from experiencing the full benefit of global price reductions.

With the cedi's performance worsening, the outlook for June suggests further increases in fuel prices.

The IES highlights the importance of monitoring these trends, as the impacts on the local economy and consumer prices are profound.