Crude oil prices up due to geopolitical tensions – BoG

The Governor of the Bank of Ghana (BoG), Dr Ernest Addison, has said the recent geopolitical tensions in the Middle East caused crude oil prices to shoot up.

Speaking at the Monetary Policy Committee (MPC) meeting on Friday 20th September, 2019, Dr Addison said that on the international commodities market, Brent crude oil traded mixed in August 2019, recording the sharpest decline in the year as global demand weakened amid escalating trade tensions.

He said: “On a year to date basis, crude oil prices increased by 3.1 percent to an average of US$59.5 per barrel.

“The recent geopolitical tensions has exerted some pressures on oil prices, pushing it above US$60 per barrel. Gold prices rebounded strongly to levels last seen in March 2013, on the back of global growth concerns. On a year to date basis, average gold prices gained 20.0 percent to US$1,501 per fine ounce.

“From the beginning of the year to date, cocoa prices have contracted by 0.8 percent to an average US$2,238.6 per tonne.”

He added: “From January to August 2019, total exports amounted to US$10,662.1 million while imports was US$8,017.7 million, resulting in a provisional trade surplus of US$2,644.4 million (3.9 percent of GDP).

“This compares to a surplus of US$1,395.1 million (2.1 percent of GDP) same period last year.

“The large increase in the trade surplus reflected a contraction of 8.6 percent year-on-year in the import bill (due to benchmark valuation adjustments), while exports went up by 5.1 percent.

“The trade surplus is expected to positively impact the current accounts with a projected deficit of US$329.0 million (0.5 percent of GDP) in the third quarter of 2019, compared with US$593.0 million (0.9 percent of GDP) a year ago.”

It is recalled that Saudi Arabian oil facilities were attacked twice on Saturday September 14, 2019.

The strike, which the United States blames on Iran, triggered fears of increased risk to energy supplies in the region.

The price of Brent crude is currently up about 10% at $66.64 a barrel, while West Texas Intermediate is 9.5% higher at $60.06 after rising as much as 15% earlier.

The drone attacks on plants in the heartland of Saudi Arabia’s oil industry hit the world’s biggest petroleum-processing facility as well as a nearby oil field, both of which are operated by energy giant Aramco.

Together they account for about 50% of Saudi Arabia’s oil output, or 5% of daily global oil production. It could take weeks before the facilities are fully back on line.

The Committee, he said: “has decided to keep the Monetary Policy Rate at 16.0 percent while monitoring developments going forward”.