Oil prices hit US$60 per barrel in Q1 2021 on the international commodities market

Oil trader’s in Ghana are expected to pay more when purchasing Crude Oil at the local pumps as prices of oil hit US$60 per barrel in the first quarter of the 2021 fiscal year.

Earlier this year, a senior Oil expert Dr Yussif Sulemana predicated that, the price of Brent Crude was going to hit a US$60 per barrel in January due to certain factors.

“The OPEC plus member, Russia and OPEC de facto leader, Saudi Arabia seemly are now in agreement and this agreement started in the first quarter of 2020 that they are going to reduce up to 9.7 million barrels taken out from the global basket and that was significant. So that amount is still in place. OPEC reduction holding, vaccines in the horizon and the vibrancy of the Asian economies are the three things accountable for these bullish sentiments in the oil prices. The projections are that, if this holds, oil prices are going to gravitate to the mid-’50s, that is 55 and if it still holds that there is good understanding among the OPEC plus members, Saudi Arabia, Russia and oil prices moves up a little we could have it hitting 60,” he explained.

As at Monday, February 8, 2021, the price went up from US$58 per barrel to US$60 per barrel which is a 1.21% increase as at last week Friday’s trading.

Speaking to Dr Sulemana on the impact of the new prices on the Ghanaian market he indicated that, there are three factors that which will have a great repercussion on the crude oil price on the local market.

“There are three things that enter into the price build up on the market and these include the exchange rate, the current prevailing price of crude oil in the market and taxes. Taxes staying as it is, exchange rate not doing so good but trying to staying balanced because we recently had some injection of liquidity into the system by the Bank of Ghana, we are hoping that it could stay stable though as temporal as it is, the other bullish factor is the oil price market. Once the price begins to go up, it is going to have a great impact on the local market and don’t be surprised to see an increment at the pumps in the coming days,” he stated.

He further stated that “if the government of the day decides to take up the taxes, they might be able to nullify the impact of the new price from the international commodities market”.

However, Dr Sulemana suggested that the only way out in this for the country is to equip local institutions to work and deliver according to their mandate.

“Government should equip the local institutions and ensure that they are provided with the adequate support to function properly, that way we can have Tema Oil Refinery and Bulk Oil Storage and Transportation function well. If we can store oil and also refinery crude we would not even feel the impact from the Global commodities market,” he said.